United Cannabis Could Make For A Profitable Trade

United Cannabis Corporation  stock has languished for years at levels below $1 per share. While it does not look poised to turn a profit, improved revenues and a key hire have turned attention to the company. Although it will take more to strengthen its balance sheet, CNAB looks like a marijuana biotech poised to at least become a profitable trade for the risk-tolerant.

CNAB Moves Forward Amid Financial Struggles

United Cannabis, or “UCANN” as most call it informally, is a medical marijuana firm focused on research and global expansion. It has existed since 2007, and it operates in the U.S., Canada, Jamaica, and several other countries with its product recently reaching Europe and the Cayman Islands.

The company researches cannabinoids. It also holds a patent in both the U.S. and other countries on what it calls “proprietary cannabinoid compositions.” Moreover, it continues to attract top talent in its field. It just announced the hire of Dr. Gregory Gerdeman as its Chief Scientific Officer.

Unfortunately, it has struggled financially. CNAB stock first launched its IPO in 2013. Optimism about its therapies took CNAB above $10 per share for a time in the spring of 2014. That burst of confidence did not last. By the fall of that year, it fell below $1 per share. It has struggled to stay above penny-stock status since then. Over the last 12 months, CNAB stock has not traded higher than 91 cents per share.

Revenues Show Impressive Growth

The low stock price reflects obvious financial troubles. However, with hemp becoming legal last year, they have turned to that form of cannabis. That move has inspired massive revenue growth.

In 2018, the company earned $7.2 million in revenue for the year. However, in July, the company released an unaudited revenue projection of $8.1 million for the first six months alone. They also forecast full-year revenues of $30.5 million. They credit the massive increase to two purchase agreements over the summer. These will bring in about $50 million in additional revenue.

Following that revenue announcement, CNAB stock spiked to just over 75 cents per share. It has now fallen back to around 50 cents per share. Still, that remains well above the lows of 33 cents per share from the early summer. The company also appears poised for a Q2 loss of four cents per share. That number will probably have to improve to sustain a rally.

CNAB — Risky But Good For A Trade

Whatever the recent price action, CNAB remains a speculative marijuana biotech stock. Investors should treat it as such. To be sure, the company has seen a vast improvement in its revenue outlook. Attracting a top researcher in the cannabinoid field also bodes well for its prospects.

However, despite higher revenues, the losses continue, and the stock trades well below $1 per share. As we recently saw, good news can drive the stock higher. It may take a game-changing breakthrough to get it back to $10 per share and beyond. Still, the improved revenue could at least make it a profitable trade.

The opinions provided in this article are those of the author and do not constitute investment advice. Readers should assume that the author and/or employees of Capital 10X hold positions in the company or companies mentioned in the article. For more information, please see our Content Disclaimer.

 

The opinions provided in this article are those of the author and do not constitute investment advice. Readers should assume that the author and/or employees of Capital 10X hold positions in the company or companies mentioned in the article. For more information, please see our Content Disclaimer.

Will Healy
Will Healy is a freelance business and financial writer based in the Dallas area. In addition to marijuana, energy, and mining stocks, he has also written about real estate, insurance, personal finance, and macroeconomics.In addition to Capital 10X, his articles have appeared on sites such as InvestorPlace, Yahoo! Finance, MSN Money, Kiplinger’s Personal Finance, GOBankingRates, and Seeking Alpha.Will holds a B.S. in Journalism from Texas A&M University, an M.S. in Geography from the University of North Texas, and an MBA from the University of Texas at Dallas.Phone: 416-721-8257. Address: 682 Indian Road Toronto, Ontario M6P 2C9.

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