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On today's TSX Breakouts report, there are 27 stocks on the positive breakouts list (stocks with positive price momentum), and 23 securities are on the negative breakouts list (stocks with negative price momentum).

Discussed today is a stock that may resurface on the positive breakouts list in 2018 if analysts' expectations are correct. The Street is forecasting the share price to rally 45 per cent over the next year. The security highlighted today is Organigram Holdings Inc. (OGI-X).

A brief outline is provided below that may serve as a springboard for further fundamental research.

The company

Moncton, N.B.-based Organigram is a licensed marijuana producer serving the medical community and is preparing to supply the recreational marijuana market once legalized. The company has signed agreements with the provinces of New Brunswick and Prince Edward Island to supply their recreational markets with a minimum of five million grams annually and one million grams per year, respectively.

Management is focused on growth with plans to steadily expand its production capacity at its facility. On March 6, the company announced that it received approval from Health Canada for its Phase 2 expansion plan. Management updated its production capacity forecasts to the following targets: 36,000 kg/year by May of this year, 65,500 kilograms/year by April 2019, 81,000 kilograms/year by July 2019, and reach 113,000 kilograms/year by April 2020. These expansion plans are fully funded.

In addition, management has international expansion plans. On March 7, the company announced the appointment of a President of its new international division. In the news release, the Chief Executive Officer Greg Engel welcomed Guillermo Delmonte to the new position stating, "His deep understanding of global markets and opportunities, track record of international leadership, and extensive network around the world are key to our international plans as we target Europe, Australia and other regions worldwide in the burgeoning cannabis and hemp marketplace."

Dividend policy

The company does not pay its shareholders a dividend.

Analysts' Recommendations

This small cap stock with a market capitalization of $552-million is covered by six analysts on the Street, of which all six analysts have buy recommendations.

The six firms providing research coverage on the company are as follows in alphabetical order: Canaccord Genuity, Cormark Securities, Eight Capital, GMP, Mackie Research Capital, and PI Financial.

Revised recommendations

Earlier this month, four analysts increased their expectations.

Matt Bottomley, the analyst at Canaccord Genuity, lifted his target price to $5.50 from $5. Martin Landry from GMP raised his target price by $1 to $7. Greg McLeish from Mackie Research Capital took his target price up to $7 from $6.50. Daniel Pearlstein from Eight Capital raised his target price to $7 from $4.50.

Financial forecasts

Growth is anticipated to ramp up over the upcoming years. The Street is forecasting revenue of $26-million in 2018, $107-million in 2019, and $181-million in 2020. The consensus EBITDA (earnings before interest, taxes, depreciation and amortization) estimates are $3.6-million in 2018, jumping to $33.6-million in 2019, and $61.9-million in 2020. The Street is forecasting the company to be profitable next year with the consensus earnings per share estimate at 14 cents in 2019, rising to 26 cents per share in 2020.

Earnings estimates have been rising for 2019 and 2020. For instance, three months ago, the consensus revenue estimates were $104-million for 2019 and $126-million for 2020.


The stock can be valued using different methodologies such as a discounted cash flow analysis or applying an enterprise value-to-EBITDA multiple.

The consensus one-year target price is $6.42, implying the share price has 45 per cent upside potential over the next 12 months. Individual target prices are as follows in numerical order: two at $5.50, $6.50, and three at $7.

Insider transaction activity

There has only been one transaction reported by an insider in 2018. On Feb. 2, the Chief Financial Officer Paolo De Luca purchased 5,000 shares at a price of $3.7372 for an account in which he has control or direction over, initiating a portfolio position.

Chart watch

Year-to-date, marijuana stocks have had mixed returns. Organigram's share price has increased 8 per cent, a respectable gain relative to its peers. In comparison, shares of Canopy Growth Corp. have increased 5 per cent, Aphria Inc. has seen its stock price fall 23 per cent, and shares of MedReleaf Corp. have declined 9 per cent. Aurora Cannabis Inc. has been an outperformer with its stock price rising 17 per cent so far this year.

In terms of key resistance and support levels, the stock price has initial overhead resistance around $4.50, near its 50-day moving average (at $4.47). After that, there is resistance around $5 and then around $5.50. Looking at the downside, there is support around $3.70, and failing that, there is support around $3.20 at its 200-day moving average.

Despite being a small-cap stock that trades on the TSX Venture exchange, the stock has reasonable liquidity. The three-month historical daily average trading volume is approximately 3.8-million shares.


The Breakouts file is a technical analysis screen intended to identify companies that are technically breaking out. In addition, this report highlights a company's dividend policy, analysts' recommendations, financial forecasts, and provides a brief technical analysis for a security to provide readers with more information.

If a stock appears on the positive breakouts list, this indicates positive price momentum, and that a company may be worthwhile for investors to look at the fundamentals in order to determine if the recent price strength is warranted and will continue. If a security appears on the negative breakouts list, this indicates negative price momentum, and may be indicative of either deteriorating fundamentals or perhaps indicates a buying opportunity.

Securities screened are from the S&P/TSX composite index, the S&P/TSX Small Cap index, as well as Canadian small cap stocks outside of these indices that have a minimum market capitalization of $200-million.

A technical analysis screen does not replace fundamental analysis, but can help identify companies worth having a closer look at.

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Friday's TSX Breakouts

Positive Breakouts15-Mar
ADN-TAcadian Timber Corp $19.71
AC-TAir Canada $28.11
BOS-TAirBoss of America Corp $11.05
ATA-TATS Automation Tooling Systems Inc $18.00
CFX-TCanfor Pulp Products Inc $16.97
CPX-TCapital Power Corp $24.83
CJT-TCargojet Inc $68.99
CLS-TCelestica Inc $14.78
CG-TCenterra Gold Inc $7.22
GIB.A-TCGI Group Inc $76.68
CIGI-TColliers International Group Inc $86.91
DRG-UN-TDream Global REIT $13.41
ENGH-TEnghouse Systems Ltd $67.31
FSV-TFirstService Corp $90.92
HNL-THorizon North Logistics Inc $1.97
PJC.A-TJean Coutu Group Inc $24.71
NOA-TNorth American Energy Partners Inc. $6.86
NG-TNovagold Resources Inc $5.47
NVO-TNovo Resources Corp. $5.11
PLC-TPark Lawn Corp. $26.95
PBL-TPollard Banknote Ltd. $23.30
PBH-TPremium Brands Holdings Corp $110.61
SHOP-TShopify Inc. $192.86
STB-TStudent Transportation Inc $9.81
SLF-TSun Life Financial Inc $55.21
TD-TToronto-Dominion Bank $76.12
WCN-TWaste Connections Inc. $96.42
Negative Breakouts
ACO.X-TAtco Ltd $41.57
CBL-TCallidus Capital Corp $7.65
CWB-TCanadian Western Bank $34.81
CGO-TCogeco Inc $70.78
KWH-UN-TCrius Energy Trust $7.40
DC.A-TDundee Corp $2.25
EFN-TElement Fleet Management Corp. $3.87
XTC-TExco Technologies Ltd $9.17
HIVE-THIVE Blockchain Technologies Ltd. $1.23
IMO-TImperial Oil Ltd $34.10
LNF-TLeon's Furniture Ltd $16.81
MDI-TMajor Drilling Group International Inc $6.30
MAXR-TMaxar Technologies Ltd. $57.40
NLN-TNeuLion Inc $0.50
NIF-UN-TNoranda Income Fund $1.25
PGF-TPengrowth Energy Corp $0.84
PD-TPrecision Drilling Corp $3.66
PG-TPremier Gold Mines Ltd $3.02
SCL-TShawCor Ltd $24.13
STEP-TSTEP Energy Services Ltd. $8.87
TRZ-TTransat AT Inc $8.98
UR-TUrtheCast Corp $0.38
VFF-TVillage Farms International $6.47

Source: Bloomberg