Why Village Farms could make you rich in June and beyond

Added on 31 May 2021

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Why Village Farms could make you rich in June and beyond

Village Farms is a well-established grower of agricultural produce and cannabis that is looking to expand worldwide. It has an ambitious goal of becoming the top cannabis producer in Canada and is working toward capturing at least 20% of market share in the dried cannabis category.

That dream suffered a setback recently due to somewhat disappointing quarterly results that have caused the stock to lose almost half of its value since February. But investors who buy the dip on good businesses that are temporarily faltering are often amply rewarded for their courage. Let's look at why Village Farms stock can make you richer.

Can you count on Village Farms?

During Q1 2021, Village Farms' sales grew by 63% year over year to $52.1 million. The increase was primarily driven by the company's acquisition of 100% of its cannabis subsidiary Pure Sunfarms, which added $17 million in revenue outside of its produce segment. At the same time, the company's earnings fell to a marginal loss from a marginal gain.

The unimpressive results were at least partly because of the lockdowns initiated by Canadian provinces to combat a third-wave outbreak of the coronavirus in the face of vaccine shortages. This hurt supply chains and forced many retail stores to close. However, Canada is exponentially ramping up its vaccination rates by now, so sales should go back to normal pretty soon. Despite the (less severe) lockdowns, Pure Sunfarms brought in CA$76.1 million in revenue and CA$13.8 million in profits, near the top of the industry.

That's good news, as Pure Sunfarms is one of the most notable cannabis brands in Canada. Its dried flowers hold the No. 1 position in the country's most populous province of Ontario by sales volume. What's more, the company's vapes, bottled oils, and gummies have been on sale since the fourth quarter of 2020.

Canada isn't the only country where Pure Sunfarms has cannabis operations. It is cultivating 130 acres of land across four facilities in Texas that could be rapidly converted into pot production. On top of that, the company owns a 12% stake in Altum International, which seeks to be commercially active in the CBD sector across East Asia and Oceania in the next three months. Finally, the company invested in DutchCanGrow to pursue one of 10 licenses for supplying legal recreational cannabis in the Netherlands.

Source: Msn news