OrganiGram Holdings Inc (CVE:OGI) Continues Torrid Run; Nears Blue Sky Breakout Territory

Benjamin A. Smith

Investors just can’t get enough of Organigram Holdings Inc (CVE:OGI) (OTCMKTS:OGRMF) (FRA:0OG) these days. The New Brunswick-based licensed producer is continuing its torrid 2019 run today, threatening to crossover into blue sky territory.

The latest zesty catalyst to fire-up investors comes via press release this morning, as OrganiGram announced it has signed a letter of intent with the Société Québécoise du Cannabis (SQDC). The company will offer consumers access to a portfolio of products which will include all tiers of dried flower, along with an assortment of pre-rolls and oils. OrganiGram now has distribution in place for all ten Canadian provinces.

With tantalizing optics in place, investors have continued pushing prices forward. Although no financial details were released, OrganiGram has added over $100 million worth of market capitalization by publishing time. Of course, much of today’s move is technical and momentum-based, as prices surged through a tight 4-day consolidation pattern on-open. Either way, the company has—for all intent and purposes—become a truly national licensed producer; even if today’s announcement was only a formality.

OrganiGram was also the beneficiary of recent bullish commentary from a major Wall St. investment bank, catalyzing this move further. Yesterday, Jefferies Group initiated coverage on the company with a “Buy” Rating and $10.00 price target, citing “potential value creation is not reflected in today’s price” in regards to the OrganiGram’s recreational brands and international hemp-based CBD portfolio.

Unmentioned in the short note is OGI’s investment in Hyasynth Biologicals Inc., a front-running biotechnology company focusing on the emerging cannabis biosynthesis space. No doubt this is a long-cycle investment which may or may not add to the company’s bottom line over the coming quarters. But it further demonstrates that unlike some mid-major LPs in the Canadian landscape, OrganiGram in not a one-trick pony.

(Source: Jeffries Cannabis Launch – February 25-2019)

To officially enter into “blue sky” territory, the OrganiGram needs a closing daily high above the previous all-time high of C$8.55 set back on October 16, 2018—just one day before the sector tanked following Canadian adult-use legalization. The more distance it put between today’s close and the previous high, the stronger the potential signal.

Further supporting OGI’s breakthrough odds is a robust volume profile—which at 4.61 million shares traded by 1:05 pm—could eclipse the yearly high volume of 6.60M shares traded on September 11, 2018.

By midday, prices were resting just under that mark, with OGI trading higher by $0.66 to $8.49 (↑8.43%).

Final Thoughts

Can OrganiGram keep this amazing run going, with prices already ↑75.61% in 2019? There’s not much evidence suggesting it can’t, given that OGI has appreciated almost 3-times faster than Horizons Marijuana Life Sciences Index ETF (HMMJ) over the past 1/3 month periods. The stock has consistently found support irrespective of daily market conditions.

Of course, sentiment can change quickly and investors shouldn’t automatically assume the party will continue in neutral/bullish market conditions. But until we start seeing the $21.00 (hourly swing pivot) and/or $20.65 (Feb. 15th gap low) levels breached in HMMJ, there appears to be little impetus for bears to stop hibernating.

Benjamin A. Smith

Benjamin A. Smith

Ben is a research analyst and capital markets professional with nearly 20 years of experience. His areas of expertise are broad-based, and include extensive knowledge of macro economics, stock/derivative trading, commodity complexes, cryptocurrencies and technical/quant analysis. He also maintains an particular affinity for U.S. politics and the macro-regulatory environment facing...
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Midas Letter is provided as a source of information only, and is in no way to be construed as investment advice. James West, the author and publisher of the Midas Letter, is not authorized to provide investor advice, and provides this information only to readers who are interested in knowing what he is investing in and how he reaches such decisions.

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