Organigram Holdings Inc. (OTC: OGRMF) (TSX: OGI) is known as a leader for medical and recreational marijuana production. They pride themselves as having some of the cleanest and highest demand strains along with high quality products. Recently OGRMF has also secured a dealers license to allow themselves to venture into CBD oils and other highly demanded products. The license helps them to expand internationally and could really open up a huge cash flow pipeline. This also makes them a possible takeover target.
With a lot of news of mergers and acquisitions as of late, the sector has been buzzing with rumors of who maybe next. While the entire sector has been seeing a large inflow of buyers lately, OGRMF along with a few other names I have recently mentioned started to see the big buying prior to the secular bump. I am going to state my case for the longer term potential for the stock if the buying continues.
Now what I am going to present today will be a longer term buy opportunity but with a defined risk parameter. Now because of the low stock price you do not have to set a risk parameter BUT I will state that is a trade and not an investment piece. However, you can treat it as such and the worst case is the stock drops to pennies. People lose more in NFLX in minutes than the total amount per share the company is currently valued at. However, for my article I would like to give you defined levels and you may choose to use them or not.
I like to buy the dip outside of breakout entries. This is a “Buy the Dip” opportunity in OGRMF for me. The targeted price would be around the $3.40-$3.55 price range. The stop would be at $2.99 if you wish to use it. Now that stop comes from an automated ATR Trailing Stop which accounts for recent volatility. I have ascending price channels and my Hull MA is sloping up. With the uptick in volume over the 50 period average and my fractal indicator screaming “Bullish”, I suspect the recent trend should continue for now. If we do see the pullback, it would basically have to wipe out the last 20 trading days of gains and defined support at $3.12 and $3.00 evens to stop me out. I am expecting the stock to try and make a run for the $4.50 range, but they have a chance for greater gains. I would suspect that a real run for $6.00-$5.50 is really possible if we make new all time highs with strong buy volume. Then we could see a real breakout occur. For the time being, the focus will be on the defined target at the all time high price. We can figure out what to do with the profits once the stock reaches that level.
This is a stock that does not get the attention I feel they deserve. They could be a desired target of the big three but in all honesty, Organigram should be mentioned with the same reverence as the others.
Find out more about Charles Moon’s analysis here at Prosper Trading Academy.
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