CannaRoyalty Stock Forecast: Still Has Potential Despite Recent Sell-Off

Cannaroyalty-Stock-Forecast-ORHOF
iStock.com/Neydtstock

CannaRoyalty Stock Forecast

After a strong bull market, U.S. equities are having a correction that’s long overdue. And this time around, marijuana stocks are taking a hit as well. One of them is CannaRoyalty Corp (OTCMKTS:ORHOF, CNSX:OH), a cannabis products and brands company headquartered in Ottawa, Ontario, Canada.

The company enjoyed a nice rally in its share price earlier this year. But like many of its peers, the stock fell quite a bit in the latest trading sessions. For those looking for a CannaRoyalty stock forecast, here’s what you need to know.

The first thing to note about CannaRoyalty is that while its corporate headquarters are located north of the border, it has been focusing on building a distribution business in California.

CannaRoyalty currently distributes over 130 branded cannabis products to the majority of licensed dispensaries in the Golden State. Strong California sales of marijuana products have fueled the company’s growth.

Advertisement

On October 22, 2018, CannaRoyalty changed its business name to “Origin House” because it reflects the company’s determination to become a global house of cannabis brands.

“While many public cannabis companies are now attempting to build brands by putting logos on packages, we have already supported the growth of 50+ brand partners,” said company Chairman and Chief Executive Officer Marc Lustig in a statement last week. (Source: “CannaRoyalty Announces Business Name Change to Origin House: The Home of Origin for Global Cannabis Brands,” Origin House, October 22, 2018.)

Basically, CannaRoyalty went from a royalty-focused investment firm to a dominant distributor in California.

The company also changed its ticker symbol from “CRZ” to “OH” on the Canadian Securities Exchange (CNSX). For American investors who want to purchase the stock over the counter, the new ticker symbol is “ORHOF.” (Source: “CannaRoyalty Begins Trading Under New Stock Symbols in Canadian and US Markets,” Origin House, October 22, 2018.)

How Is CannaRoyalty Stock Doing?

Most recently, CannaRoyalty stock hasn’t been a hot commodity. In just the last trading session alone, ORHOF stock tumbled 6.3%. However, this was hardly a surprise as the Dow, the Nasdaq, and the S&P 500 all closed in the red on Monday.

Looking at bit further back, you’ll see that despite the recent pullback, CannaRoyalty shares actually had a solid bull run. Over the past 12 months, ORHOF stock has more than doubled.

CannaRoyalty Stock Chart

Chart courtesy of StockCharts.com

A Booming Business

The impressive rally in CannaRoyalty’s stock price was backed by a booming business.

In the second quarter of 2018, the company generated CA$3.5 million of revenue, representing a staggering 266% increase year-over-year. CannaRoyalty also earned a net income of CA$0.17 per diluted share, which was a huge achievement; in the year-ago period, the company had a net loss of CA$0.05 per diluted share. (Source: “CannaRoyalty Announces Record Financial Results for the Second Quarter of 2018: Revenue of $3.5 million, +446% Sequentially; Earnings per Share of $0.18,” Origin House, August 23, 2018.)

CannaRoyalty Acquisitions

Going forward, the company is well-positioned to benefit from its recent acquisitions.

In July 2018, CannaRoyalty closed the acquisition of FloraCal Farms, a licensed premium craft cannabis producer located in Sonoma County, California. FloralCal Farms has a temporary medium indoor cultivation license from the state of California. The company also has a Type 6 non-volatile manufacturing permit in Sonoma County. (Source: “CannaRoyalty Closes Acquisition of FloraCal, a Premium Craft Cannabis Producer,” Origin House, July 3, 2018.)

Then, on September 27, CannaRoyalty announced that it could acquire 180 Smoke, a dominant online and retail vape operator in Canada. The deal could substantially boost CannaRoyalty’s presence in the Canadian market, as more than 80% of 180 Smoke’s nicotine vape customers are also potential cannabis users. (Source: “CannaRoyalty to Acquire Dominant Online and Retail Canadian Vape Operator, 180 Smoke,” Origin House, September 27, 2018.)

In October, CannaRoyalty closed its acquisition of RVR Distribution. The combined companies generated $31.9 million in total revenue in fiscal 2017. (Source: “CannaRoyalty Closes RVR Distribution Acquisition, CannaRoyalty Closes RVR Distribution Acquisition,” Origin House, October 18, 2018.)

With these acquisitions, investors could see some cheerful Origin House financials down the road.

Is the Best Yet to Come?

In the latest earnings report, CannaRoyalty’s CEO made specific comments on how the company’s acquisition strategy could let the growth momentum seen in the second quarter continue for the rest of the year.

“This growth is expected to continue in Q3 and Q4 as FloraCal and RVR are added to the Company’s financials and as our team continues to grow market share and expand the Company’s supporting manufacturing and value-add services footprint,” he said.

“Both RVR and FloraCal are performing above expectations, and we are actively executing our plans to increase the revenue generating capacity of both companies.” (Source: “CannaRoyalty Announces Record Financial Results for the Second Quarter of 2018: Revenue of $3.5 million, +446% Sequentially; Earnings per Share of $0.18,” Origin House, August 23, 2018.)

Analyst Take

It’s not uncommon for a weed stock to take a tumble after a strong rally, especially in a market-wide sell-off. If the company can keep up its growth momentum as its CEO projected, CannaRoyalty stock might be able to get back on its uptrend.