Avant Brands Inc (TSX: AVNT) formerly GTEC Holdings Ltd., is a Canada-based cannabis company. The Company is a producer of handcrafted cannabis products.

Key Highlights

Poor Fundamentals: The company is loss making at operating level and losses have significantly expanded in the quarter just gone by, with reported operating margin of negative 87.5% in Q3FY21 compared to negative 31.04% in Q2FY1. Bottom line losses have also extended significantly in Q3FY21. Also, the company has never reported positive cash flows, so overall financial health of the company is in bad shape.

Technical weakness: The broader trend is quite bearish in the stock, with its shares traded below all its SMAs. Moreover, from September onwards the stock has consistently traded below its 20-day SMA, which is acting as a crucial resistance in short-term. Moreover, the leading momentum indicator the 14-day RSI level near 32 indicating that the bears are strongly controlling the stock.

Technical price chart (as on December 06, 2021). Source: REFINITIV, Kalkine Group

Stock recommendation

The company’s fundamentals are poor, and stock is hovering in a long-term bearish zone. Also, the Cannabis sector is going through a downtrend , as the sector significantly affected because of COVID-19 led supply chain disruption and Afghanistan episode took place recently. However, Big cannabis companies are backing a new, celebrity-infused campaign to enlist marijuana users to pressure members of Congress to legalize pot nationwide. Federal legalization has advanced somewhat but still faces strong headwinds on Capitol Hill. Hence, based on the above rationale, we recommend a “Watch” stance on the AVT stock at the closing price of CAD 0.27 (as on December 06, 2021).

1-Year price chart (as on December 06, 2021). Source: REFINITIV, Analysis by Kalkine Group

*The reference data in this report has been partly sourced from REFINITIV.

Disclaimer

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