Ever since cannabis legalization passed in Colorado and Washington, there has been a lot of discussion about the potential of pot stocks – and we’re thinking we’ve finally found a pot stock that Wall Street is buying.
It’s easy to overlook the marijuana sector on Wall Street, but Q2 earnings from Growlife (LIFE.C) and iAnthus (ITHUF.PK), two companies that focus on growing and selling medical marijuana, quickly caught the attention of investors. The two companies, which merged last year, reported record revenue and profits for the first quarter of 2018. Investors are encouraged by the nearly $100 million of sales and $7.3 million of profits the companies reported in the second quarter. The companies will be host to a presentation at the 2018 BIO Investor Summit in NY next month, where they will outline how their businesses are progressing. Analysts are also encouraged by the companies’ growth plans, which include expanding into new markets.
Green Growth Brands (CSE: GGBX) (OTC: GGBXF): This is a company that was once dismissed as a “Pot Stock” with no prospect of ever becoming a real business. It’s critical to understand that, when it comes to the Marijuana industry, the “Pot Stock” moniker still means a lot more than the actual impact of the company itself.
Agrify’s stock has risen 255 percent since June and is poised for more gains.
It’s great to discover one that’s doing everything right in the crowded world of underperforming US cannabis companies. Agrify Corp (NASDAQ:AGFY), a newly listed marijuana business, recently announced record second-quarter earnings and said that it intends to exceed its full-year sales forecast.
A few new clients have recently signed large contracts with Agrify. It has also strengthened and extended relationships with current clients, such as:
- In Nevada, a $3.5 million deal was reached to assist one client quadruple his marijuana flower output.
- A contract worth up to $2.5 million to finish the building of a 25,000-square-foot addition for a client in Denver, Colorado.
- A $12.0-million deal for the construction of a 12,400-square-foot facility in Nevada, as well as an extra five years of software-as-a-service (SaaS) income
This explains why Agrify’s stock has increased by:
- Over the past month, it has increased by 108 percent.
- Over the past three months, there has been a 253 percent increase.
- Over the past six months, it has increased by 118 percent.
Strong gains have been made, and Wall Street believes that better days are coming. The average price objective for AGFY stock among analysts who have given it a 12-month price target is $34.33, implying a 16 percent increase.
Following the release of Agrify Corp’s second-quarter earnings, an analyst at Maxim Group, LLC is even more positive on the company. The analyst increased his price objective from $22.00 to $40.00, implying a 32.5 percent gain.
StockCharts.com provided the chart.
Overview of the AGFY Stock
Agrify assists its clients in the cultivation of cannabis. The business, headquartered in Billerica, MA, creates cutting-edge technology and software for the indoor agriculture industry. (Source: Agrify Corp, “About Us,” latest visited August 26, 2021.)
While the company’s technology may be useful for producing high-value veggies and fruits, it’s ideal for the marijuana industry’s rapid growth.
Data, science, and technology are used by the business to assist farmers in growing high-quality, consistent, and lucrative crops. In addition, the firm offers consulting, engineering, security, and construction services.
Agrify Corp’s business strategy comprises regular SaaS income from its “Agrify Insights” software, as well as significant sales of its Vertical Farming Units (VFUs).
Agrify Insights integrates with the company’s VFUs and container farms to help customers automate and optimize their grow operations of any scale. Based on the number of days and climatic variables that customers select for each grow phase, the program determines the best planting schedule and plant motions.
Multi-Year R&D Partnership With Curaleaf
Agrify announced in July that it has partnered with Curaleaf Holdings Inc on a long-term research and development project (CNSX:CURA, OTCMKTS:CURLF). (Agrify Corp, July 6, 2021, “Agrify Enters Into Multi-Year Vertical Farming Research and Development Partnership With Curaleaf.”)
Curaleaf is the biggest vertically integrated cannabis business in Europe and one of the leading multistate marijuana operators in the United States (as Curaleaf International).
The study will look at how harvest yields, plant terpene profiles, and flavonoid concentrations are affected by specific environmental variables generated and managed by Agrify’s VFUs and Agrify Insights software.
Agrify Corp will also investigate and test methods for improving the appearance, fragrance, and overall chemical profile of cannabis flower.
Agreement With Bud & Mary Cultivation
In mid-August, the company announced a definitive agreement with its first “Agrify Total Turn-Key Solution” (Agrify TTK Solution) customer, Bud & Mary Cultivation, Inc. (Source: “Agrify Announces Record Second Quarter 2021 Financial Results,” Agrify Corp, August 12, 2021.)
The agreement has the potential to bring in up to $280.0 million in income.
True House’s partnership is expected to generate $45.3 million in revenue.
In mid-August, Agrify also announced that True House Cannabis LLC, its second Agrify TTK Solution client, had inked a final agreement. (Agrify Corp, August 11, 2021, “Agrify Announces Second TTK Partnership with True House Cannabis LLC.”)
True House will utilize Agrify to assist them build out its 22,000-square-foot facility, which will have 159 VFUs, connected catwalks, integrated grow racks, and pest control systems.
Agrify Corp will offer up to $7.0 million in senior credit to help finance the facility’s development. The loan is anticipated to be repaid in 30 months following the facility’s initial commercial output.
Agrify will also earn fixed SaaS income from True House’s usage of Agrify Insights software, as well as production-based payments and brand licensing fees.
Over the course of ten years, the agreement is anticipated to produce up to $45.3 million in income.
Keep track of the second quarter’s results.
Agrify reported record sales of $11.8 million for the second quarter ended June 30, up 203 percent year over year and 69 percent sequentially. (Source: Agrify Corp, op. cit., August 12, 2021.)
The company’s new bookings reached an all-time high of $30.7 million. Its entire backlog rose to $101.1 million at the end of the preceding quarter, up from $82.2 million at the end of the previous quarter.
The business recorded a $5.6 million net loss in the second quarter, compared to a $2.4 million loss in the same time the previous year.
“At the start of the year, we set out to reach $40 million in top-line sales, establish a relationship with a large [managed services organization], and introduce our newest technology, VFU 3.6,” said Raymond Chang, CEO of Agrify Corp. Ibid.) (Source: Ibid.)
“I am pleased to announce that we have already surpassed these objectives, and we are well on our way to achieving our increased full-year revenue estimate of $48-$50 million for 2021,” he added.
Expert Opinion
What is there not to like about Agrify? The firm has been generating record financial success, giving sound advice, developing commercial connections, and attracting new clients.
Agrify Corp is on pace to meet the higher goal of its previously announced total revenue estimate of $48.0 to $50.0 million for 2021, thanks to strong first and second-quarter performance.
The first half of the year was historic for Agrify, but the second half of the year may be even more so for AGFY stock.
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