After OrganiGram stock (NASDAQ:OGI) jumped over 13% yesterday, I am wondering if it is a buy. The cannabis stock sector is similar to the tech investing of the 2000s. There are some real winners like Google, but many more losers.
Like most stocks and efts, I generally go through a simple process in which I grade the investment. In addition, I try to determine the time frame and type of investment I want to make, viz., the stock or option for the stock. Lastly, I determine the amount and if I want to use margin.
To cut to the chase, I think OrganiGram stock is potentially a buy if the price moves up a little more and consolidates around $3. The first signal I am looking for in the OrganiGram stock to do is for the 10EMA to break the 50MA. I would give a grade B-, meaning it is something I am watching very closely, but not 100% sure if I want to enter a trade.
Generally speaking, I would consider trading options on a stock like Organigram, because they are cheap, and this would be a short term trade for me. Investors should be encouraged to determine their risks and investment goals before entering the trade.
The following is how I graded OrganiGram stock.
Company & Business Model – Grade C
OrganiGram Holdings are unfortunately negative in many areas, specifically the EPS and net profit margin. The interesting thing or rather a silver lining is the increase in revenue. If OrganiGram can focus on its business, it could turn into a winner long term.
“Despite ongoing industry challenges, we are pleased with solid Q1 2020 results and our return to positive adjusted EBITDA during the quarter, said Greg Engel, CEO. Our team was also successful in shipping the first of our Rec 2.0 products as planned and on schedule in December of 2019. We also look forward to the launch of the remainder of our vape pen portfolio followed soon after by our premium cannabis-infused chocolate products. In addition to an exciting line-up of 2.0 products, we are rolling out a couple of new core strains, such as our high THC Edison Limelight, across the country following their success as limited-time-offers in smaller markets.”
Sector/Industry – Grade B
Investors in the cannabis industry need to be extremely diligent and patient in picking their stocks. This industry is very risky. The high risk may not be worth the reward. That being said, “green” stocks could have the potential to be very rewarding, so investors should not avoid it.
Technical Indicators – Grade B
A majority of the one-day moving indicators are now positive and indicating a “Buy.” Specifically, the 10EMA, 50EMA, and Hull Moving Averages are positive. Most one day oscillators are neutral. However, momentum and MACD are signally a buy.
1 Day OGI Moving Averages
Name Value Action
Exponential Moving Average (5) 2.52 Buy
Simple Moving Average (5) 2.46 Buy
Exponential Moving Average (10) 2.50 Buy
Simple Moving Average (10) 2.44 Buy
Exponential Moving Average (20) 2.52 Buy
Simple Moving Average (20) 2.59 Buy
Exponential Moving Average (30) 2.54 Buy
Simple Moving Average (30) 2.55 Buy
Exponential Moving Average (50) 2.63 Buy
Simple Moving Average (50) 2.52 Buy
Exponential Moving Average (100) 3.06 Sell
Simple Moving Average (100) 2.85 Sell
Exponential Moving Average (200) 3.79 Sell
Simple Moving Average (200) 4.44 Sell
Ichimoku Cloud Base Line (9, 26, 52, 26) 2.77 Neutral
Volume Weighted Moving Average (20) 2.65 Sell
Hull Moving Average (9) 2.58 Buy
