Kush Bottles Stock: One Top U.S. Marijuana Stock to Watch as Bears Swarm the Market

kush bottles stock
iStock.com/eskymaks

One Hot Marijuana Packaging Company Stock

As the marijuana market nosedives following the stunning December bull run, one marijuana stock successfully holds out against it. I’m talking about marijuana packaging company Kush Bottles Inc (OTCMKTS:KSHB) stock, which is up more than 10% since the beginning of this year. Now trading for nearly half of its all-time high price, this top U.S. marijuana stock is looking dirt cheap.

Kush Bottles is one of the fastest-growing U.S. marijuana companies in terms of sales and possibly the only one of its kind in the industry. Unlike other marijuana players that are wading through deep waters, this one is making its way across the sea without dipping its feet in it.

Kush Bottles is only a packager of marijuana products. It doesn’t grow or sell weed or any derivative products, which keeps it in the policymakers’ good books. Other marijuana companies are at the mercy of local politics, but this one is relatively safe since it doesn’t directly touch the green grass.

But does it make any money in this peculiar line of business?

Advertisement

Yes, it does. Not only that, but it’s actually profitable, unlike most marijuana companies. Once you see its sales, you’ll be surprised at how significant the packaging business is in the industry.

Bear in mind that a product’s packaging is the first impression a buyer carries of it. Particularly, in the case of generic edible products where differentiation on the basis of sight, smell, taste, and touch is very limited, packaging is what helps consumers tell them apart. Consider it the bedrock of successful branding.

So, for sellers of cannabis products, packaging is a big deal. If it wasn’t, why would marijuana producers north of the border be resisting packaging regulations?

Take note that even though the country is moving toward the legalization of recreational pot and will soon allow marijuana sellers to sell their products freely across the country, policymakers at Health Canada are proposing some very strict regulations on packaging.

Marijuana companies are in turn protesting, since the packaging regulations would restrict them in differentiating themselves from their competitors.

The point I’m trying to make here is that a packager like Kush Bottles plays a key role in the industry.

Coming to Kush Bottles’ financials, the company recorded the second-highest revenue in the U.S. marijuana industry in the most recent quarter, only trailing pure player Terra Tech Corp (OTCMKTS:TRTCD).

Kuch Bottles’ revenue came about to be about $8.85 million for the first quarter of 2018, a 258% increase from the same quarter a year ago. A modest net income of about $94,000 was reported, but it’s a substantial improvement from the prior year’s loss. The company has also managed to save $5.5 million cash in its coffers. (Source: “Kush Bottles Reports First Fiscal Quarter 2018 Results,” Kush Bottles, Inc., January 16, 2018.)

The improving financials are ultimately translating into its price. Since the Kush Bottles IPO two years ago, KSHB stock has soared more than 120%.

Chart courtesy of TradingView.com

In terms of local expansion, the company has already secured the country’s West Coast, where California, Oregon, and Nevada jointly make up the biggest market for medical and recreational pot and house most of the leading marijuana companies.

The packager is now moving to the East Coast, where the marijuana market is warming up. Maine and Massachusetts, although small, already allow recreational use of pot. Meanwhile, Vermont joined the list of legal markets for recreational weed just earlier this year.

Kush Bottles expects New Jersey to be the next state on the East Coast to fully legalize marijuana. So east is where the company is setting up its next base in a bid to procure new business.

Analyst Take

For investors seeking relatively safe exposure to the U.S. marijuana industry, Kush Bottles may be a rewarding wager. Although reliant on the marijuana industry, the company’s nature of business is much less risky than a pure marijuana company whose future, for now, relies solely on the wishes and whims of policymakers.

With improving financials and an expanding market share, KSHB is certainly a top U.S. marijuana stock to watch right now as bears push prices down to bargain levels.