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The cannabis sector has been under pressure and this pullback has created a great opportunity for investors. When you look back to the same time period last year, it looks likes cannabis stocks are following a very similar trend and we are closely monitoring the recent weakness.
When it comes to investing in cannabis stocks, it is important for investors to focus on companies that are attractively valued, have visible growth opportunities, and are led by a management team with a proven track record of success.
One company we have been monitoring closely is EVIO Inc. (EVIO). The company is focused on cannabis lab testing opportunity and is in the middle of a major expansion. Over the last year, EVIO has been executing flawlessly on a coast-to-coast expansion in the United States and has operations in Oregon, Colorado, California, Massachusetts and Florida.
Capitalizing on the California Cannabis Opportunity
Although EVIO continues to execute and the California market opportunity has improved following the implementation of new regulations, the shares have been trading lower and are looking for a bottom.
On July 1st, the California cannabis market drastically changed and new legislation has required retailers to only sell cannabis products that have been tested by a licensed third party. This is a significant transition for a multi-billion-dollar legal cannabis market and we are monitoring how this change benefits EVIO.
We are most excited by the leverage to California and view this as a major growth driver going forward. In late June, EVIO’s Northern California laboratory in Berkeley announced a major milestone after attaining the ISO 17025 accreditation, the world’s highest recognized quality standard for calibration and testing laboratories. Following the change in regulations, EVIO Labs Berkeley is well-positioned to meet the increase demand for analytical testing services for regulated cannabis and is prepared for these heightened regulations.
Executing on All Cylinders
EVIO has been focused on growth and has been executing on all cylinders. Last month, the cannabis lab testing company retired all of its outstanding convertible debt. In 2018, EVIO has raised capital and has been putting this money to work in ways that will prove to be accretive to the business.
We are favorable on entrance into new markets and these developments are in-line with EVIO’s growth strategy. The California, Colorado, Florida, and Massachusetts marijuana markets are attractive due to their growth potential and diverse geographic location. As demand for legal marijuana continues to increase, EVIO will benefit from the increased demand for testing services.
During June, EVIO has come well off its highs and we are monitoring the recent decline. EVIO is an undervalued and underappreciated opportunity with a market cap that is below $18 million. With the attractive leverage to states like California and Florida, we consider EVIO to be an attractive opportunity and are closely monitoring the shares from here.