Village Farms Up 300%, Is this Hemp Stock a Buy?
The coronavirus had a disastrous impact on the revenues of several industries. However, certain stocks in certain industries also benefitted a lot from the chaos of 2020. There have been some stocks in the cannabis space that have done very well. Investors looking for a true pot stock may consider adding this British-Columbia based agricultural producer Village Farms International Inc. (VFF) to their portfolios. The carbon-neutral company makes a perfect fit into the popular concept of environmental, social, and governance (ESG) investment theme. In 2020, shares of VFF surged over 100%, and VFF hemp stock has provided excellent returns to its investors. The stock was trading at $3.5 levels in April 2020 and is now at $15.1. Village Farms is up 300%, but is this hemp stock a buy?
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Village Farms Acquisition of Pure Sunfarms
During the pandemic, the demand for marijuana increased as people’s perceptions about pot started changing. VFF was primarily engaged in the agricultural business and has been one of the largest suppliers of tomatoes, bell papers, and cucumbers in Canada. VFF then entered into the high-growth cannabis business holding the hands of Emerald Health Therapeutics. Under the joint venture called Pure Sunfarms, VFF used to provide greenhouses while Emerald provided knowledge related to growing high-quality cannabis in these environments.
Last November, it acquired 100% shares of the said venture. VFF can now access Pure Sunfarms’ profits in their entirety and doesn’t need to share any more of it with Emerald thus giving a huge boost to its revenues.
After this acquisition it now has access to about 10 million sq. feet of low-cost greenhouse space in Northern America. Also, with the increased profits from Pure Sunfarms operations, it can easily grab the new opportunities that would come up as the new cannabis laws and regulations come into play post US elections. But does this mean VFF hemp stock is a buy?
Attractive Projects in the Pipeline for Village Farms
M&As are one of the most convenient ways for growing a growth-oriented entity and venture into newer markets. Last August, Village farms partnered with Altum International Pty Ltd, a leading cannabinoid platform in Asia-Pacific to enter the CBD and cannabis markets in this region.
The Asia-Pacific market has the potential to be one of the biggest cannabis markets with approximately 4.5 billion people – or four times the size of the US, Canada, and Europe combined. Venturing into this newly developing market will provide a huge TAM to VFF and can bring a massive surge in revenues.
Clean energy is the current need when pollution is soaring high which is making the renewable energy industry thrive. VFF renewed its contract with the City of Vancouver regarding landfill gas supply agreement and transition to a more attractive long term model of business based on converting landfill gases to renewable natural gases. This move will eliminate 28,000 metric tons of CO2 emissions.
Also, recently Village Farms completed 10.8 million direct share offerings at $12.40 per unit to institutional investors for financing its working capital requirements that may help the company continue its acquisition spree. But is Village Farms hemp stock a buy?
Back-to-back Profitable Quarters for VFF
Amidst the pandemic when most of the pot stocks suffered huge losses and were struggling for survival, Village Farm’s net sales increased by 70%. However, the nine-month total sale of $4.6 million was much lower compared to last year’s figure of $9.5 million.
In fact, VFF numbers may look much better this year. Additionally, the net income in the December quarter was a whopping 200% more than the previous one. A notable fact in VFF’s performance was it was the eighth consecutive quarter of positive EBITDA for Village Farms with a 125% increase compared to the previous quarter. Considering the new partnerships made by the company, this year profits should be significantly higher. Okay, I’ve read enough, is VFF a good stock to buy?
Bottom Line: Is Village Farms stock a buy?
Indeed, Village Farms is up 300% since March 2020, but is this hemp stock a buy? Despite all the volatility in its prices Village Farms International has huge growth potential ahead. Though last year its profits were relatively lower, the company’s value skyrocketed because of its near-perfect growth strategies. If it can grow by more than 100% even in times of such economic crisis one can imagine how much return it will provide its investors when everything goes back to normal. Therefore Cannin.com still recommends VFF as a strong buy.
Village Farms Up 300%, Is this Hemp Stock a Buy?
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