For a long time, the Valens Company (TSXV:VLNS) (OTCQX:VLNCF) has been a beacon for the cannabis space. Rich has frequently pointed to Valens as an example of how cannabis companies can and should be profitable. At the start of the month, the company topped Rich’s list of cannabis stocks to watch in March.
Now, he’s taken a big leap and declared VLNS his number one pot stock pick for the year. He breaks down why it’s such a promising investment and how its near- and long-term strategies could play out. And he’s not the only one that’s bullish on Valens.
“The average price target for Valens in Canada is $8.60, and the stock is currently trading at $2.50,” Rich explains. “We’re talking about an upside that’s more than 300% from these prices.”
The Valens Company is Making Major Gains
Earlier today, the company announced that it has received conditional approval to uplist from the TSX Venture Exchange to the Toronto Stock Exchange. Valens CEO Tyler Robson called this a “significant milestone” in the company’s efforts to broaden its appeal to a larger shareholder base.
“Coming off a record year of growth for the company, this uplisting will work to enhance the liquidity of our stock and enable us to continue building long-term shareholder value,” he added.
The “record year of growth” is a reference to The Valens Company’s fourth-quarter and full-year fiscal results, published February 24. For 2019, Valens reported that revenue increased to reach $58.1 million, more than half of that from its Q4 revenue. A big part of this was an increase in price—in Q3, the company’s revenue per gram was $0.61, while in Q4, it rose to $1.25.
Gross profit for the year increased to $41.4 million, or 71.2% of revenue. Adjusted EBITDA came to $27.4 million for the year. Finally, the company ended the year with a strong balance sheet, having $58.7 million in cash and short-term investments and a net working capital position of $88.2 million.
Also in 2019, Valens officially became the largest white label product development, manufacturing, and third-party extraction company in Canada.
The Valens Company in 2020
On March 5, Valens announced the launch of a line of cannabis-infused beverages. This will give the company an entirely new revenue stream to look forward to throughout the year.
According to MarketBeat, two analysts have given VLNS a positive recommendation, with no neutral or negative reports identified. Its current market cap is $214 million, and Rich believes it can go a lot higher.
“I believe this is a company that will have a $1 billion market cap,” he says. “I believe they are undervalued right now, and they aren’t far from their 52-week low. They’ve got a good management team, a tight share structure… I believe they can be the most profitable cannabis LP in Canada.”
What do you think? Is The Valens Company destined to lead the cannabis pack? If you have any plans to take a position in VLNS, make sure to do your own research before investing. And as always, keep watching RichTV Live for more cannabis stock news.
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