Cannabusiness Group (OTCMKTS:CBGI) Attempts Another Run

Cannabusiness Group (OTCMKTS:CBGI) has been a constant on the list of the most heavily traded penny stocks for the last month or so and just a quick look at the company name reveals why. That’s right, CBGI is just one of the many pot stocks on the OTC Markets and the colossal volumes that it has registered since mid-February show that the hype around it is huge.

The performance isn’t too bad either. The new business plan sent the ticker on an absolutely amazing run during which it managed to climb from less than $0.03 per share all the way to more than $0.40. That said, CBGI suffered a heavy correction last week when it wiped out half of its market cap in just three sessions.

Fortunately for the shareholders, the ticker seems to be on the move again. The new week started with an 8% climb on Monday and yesterday it added another 16% while shifting around $3 million worth of stock. Today’s trading isn’t quite as explosive, but about an hour after the opening bell, the ticker is still in the green.

Investors seem excited and there’s no shortage of people who believe that CBGI is in for another eye-popping run. If that is to happen, however, it needs to be fueled by something more than hype and enthusiasm. So, is that the case?

Some of the press releases don’t sound too bad. Three weeks ago, they announced that they want to acquire 17.3 acres of land which is already occupied by a medical marijuana cultivator. They also bought an ownership interest in a company called NorCal Connection, LLC – the owner and operator of an e-commerce website which sells all sorts of pot-related paraphernalia.

Unfortunately, we’ll need to wait for some time until we see what the results of the two acquisitions are. CBGI said that they’re trying to gather all the required documents to turn the company into a SEC reporting entity but they also informed us that we won’t see audited financials until the 10-Q for the first quarter of 2014 is ready.

The only thing investors can rely on at the moment is the annual report for the year ended December 2013, but they should bear in mind that the figures in it are actually related to CBGI‘s former business – the development and commercialization of sports nutritional supplements. This means that the $1 million in revenues found in the document will have no bearing on CBGI‘s future performance.

A thing that could have an effect on the company, however, is the colossal amount of stock that got issued last year. The report tells us that a whopping 24,750,000 new shares saw the light of day between March 2013 and November 2013. They were all issued as a conversion of debt and they were all valued at $0.0001 per share.

Put the three-for-one split into the equation, and the number of discounted shares grows to 74,250,000.

You can see that although the press releases sound optimistic, there are still some things that could potentially hamper the stock’s progress. CBGI suffered a rather scary crash last week and investors can only hope that it will manage to avoid similar drops in the future.

Speaking of which, lots of people got seriously burned yesterday when the promotional pressure got the better of American Heritage International Inc (OTCBB:AHII). In just six and a half hours of trading, the stock slashed half of its value and stopped at $0.70 per share. About an hour after today’s opening bell, it’s another 10% down which could suggest that the slide might continue for a few more days. Primco Management Inc (OTCBB:PMCM), on the other hand, jumped up by more than 56% and it seems to be going strong today as well.