The cannabis sector in the market has come under pressure recently, as investors grow impatient with a lack of legislation that would allow shares to be fully listed on the Nasdaq Stock Exchange. US stocks that have a direct link to cannabis are currently relegated to the OTC stock exchange, which does not have the same level of liquidity as the Nasdaq.
But there are some side games on the cannabis industry that don’t have this registration restriction. These are mainly equipment suppliers like GrowGeneration Corp (GRWG) and Agrify Corp.
Another coin that’s on my radar is Urban-Gro (UGRO), which is very small and trading lightly, but it appears to have a very strong balance sheet and is on the verge of strong growth.
UGRO provides the design, engineering and integration of cultivation systems for cannabis and food. She is developing what are known as Controlled Environment Agriculture (CEA) systems. It is also committed to managing these systems on an ongoing basis. On June 29, the company acquired MJ12 Design Studio, a multi-state architecture and interior design company focused on the CEA market. The agreement should be immediately accretive.
The company made a second spot on February 11 and raised around $ 62 million. He used some of the proceeds to pay off his debt and close the MJ12 deal, but he had $ 50 million in cash as of March 31, which compares well to his market cap of $ 100 million.
It also saw its revenue soar to $ 12 million in the first quarter, a jump from the previous quarter of $ 9.2 million.
An investor presentation is available here.
The action is a micro-cap and trades very finely. It can be very volatile, but the strong balance sheet combined with good growth should dip it higher over time.
The company has announced that its June quarter earnings report will be released after the close on August 11.
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