Aleafia stock hit its year-to-date high of $2.77 CAD in February. Since then, shares have steadily declined across the year, hitting a paltry $1.04 CAD a little over one week ago. However, a sudden resurgence happened in August that not only boosted Aleafia Health (TSX:ALEF) (OTCQX:ALEAF) stock but made investors sit up and take notice.
There is a lot of potential in this penny stock cannabis play.
Aleafia Stock Now
On August 2, the company announced that it is considering a hostile takeover bid for troubled cannabis rival CannTrust Holdings (TSX:TRST) (NYSE:CTST). The news caused shares to jump roughly 25% in a 24-hour period.
CannTrust is in the throes of a rough time; the company was found to be illegally cultivating extra flower that it did not have licenses for. Amidst the distrust with management and the suspension of production, TRST stock has lost more than 55% to the drama.
But despite the trouble, CannTrust's fundamental business is viable and could prove to be advantageous to Aleafia Health. Investors are all too aware of this fact and supported the announcement.
Aleafia Stock and Emblem Cannabis Corp
Also around the same time, Aleafia Health announced that its wholly-owned subsidiary, Emblem Cannabis Corporation, completed the largest adult-use cannabis order in the company’s history. The order is expected to generate over $1 million in sales and, vitally, has been sent to a Canadian provincial government for distribution to online and retail consumers. Supplying at the provincial level helps to prove the quality assurance of Aleafia's product.
With this level of product hitting the shelves, impressively in 2019, Aleafia is grossing more revenue monthly from the sale of cannabis than it did in the entire 2018 period. And with a production capacity of roughly 138,000 kg of dried flower across indoor, greenhouse, outdoor, and strategic supply agreements, expected by 2020, revenues can only increase.
Earlier in July, the company raised more than $40 million through a public offering for this reason; it intends to use this capital to accelerate expansion plans in order to meet its capacity target.
Once Aleafia Health operates at its fullest capacity, the company can expect to generate sizeable revenues. For this reason, the low price of Aleafia stock should entice investors.
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