By Chris Sandburg / in Momentum & Growth, Momentum Stocks, Sector Watch, Stocks / on Thursday, 29 Dec 2016 10:10 PM
We pointed out that the then-recent filing of an IP application by a a company in which Medical Marijuana holds a circa 35% position, Axim Biotechnologies Inc (OTCMKTS:AXIM), moved the latter, but failed to really move the latter, and that this was a bit of a red flag. Not enough to put us off completely, but enough to temper enthusiasm.
Anyway, that was then, this is now. What’s happened over the last few weeks, and what does it mean?
The company has focused on expansion in the central and south American markets, and it’s from this expansion that much of the value-add seen over the last few weeks derives. First up, Medical Marijuana announced that the cannabis regulations had been relaxed in Mexico, and that it was looking to build on its operations in the nation by expanding its full range into the Mexican market. The current product it sells into the space is a product called Real Scientific Hemp Oil-X, and it was the first-ever federally approved CBD product in Mexico. It’s got a portfolio of alternative Real Scientific products waiting in line to get in the country, and now the regulations have eased, the company should be able to start generating multiples of its Mexican revenues near term.
The next major update detailed the expansion of HempMeds (which is the subsidiary that sells the above mentioned product into the Mexican market) into Chile and Argentina. Shortly after that, we got word that the same product had started being sold in Brazil, so that gives HempMeds, and by proxy, Medical Marijuana, a solid presence south of the US border.
For us, these are all great moves, but we’re looking to the US as the market that’s going to drive real value, and as yet, things aren’t moving overly fast. So, that’s what we’re looking for next. Of course, the market is a little less mature in many of the US markets, but in places like California, we feel there is plenty of room for fast expansion. As such, we’re keeping an eye on releases purporting to these above-the-border markets before confirming a long term bias.
With that said, to build a medical marijuana operation in places like Mexico and Brazil is not an easy task, and that Medical Marijuana is making considerable inroads towards this task strengthens a near term these, given its current market capitalization. Weighing the company up against some of its peers in the space, Medical Marijuana has some real positives. It’s generating revenues, it’s got an international distribution network in place, and it’s got a great product in a rapidly growing, yet still very much nascent, industry.
Cash isn’t great, so we expect some degree of dilution if the company is to capitalize on its potential, but so long as management can put together a raise structure that isn’t overtly toxic to shareholders, there’s a definite momentum opportunity on this one.
Look to the continued stream of business development updates from South America to support near term value, and updates relating to the US operations as indicative of longer term potential.