The cannabis sector is notoriously speculative right now. There’s a merger on the books to create the world’s largest cannabis company. And this giant already has competition in this regard.
As speculation about US legalization mounts, more attention is being paid south of the border. However, there are a few niche Canadian cannabis options that are looking fascinating right now.
Let’s dwell on one such opportunity that I think could be a unique speculative buy for cannabis investors.
Impressive finances for this little Canadian cannabis player
The Valens Company (TSX: VLNS) is a relatively smaller player in the Canadian cannabis industry. How small Well, the company has a market cap of $ 440 million at the time of writing.
In fact, this is not microscopic by most standards. However, when compared to the company’s larger competitors, Valens appears to be overlooked by many investors.
The company reported some impressive financial results during its last quarterly earnings release. Valens posted massive sales growth of 25% over the previous quarter. The company had sales of $ 20 million in the first quarter alone. This growth was driven by product sales of 1.4 million units (up 23%) and provincial orders up 8%, although sales declined in the first two months of the quarter.
Indeed. Cannabis sales are rising in Canada and Valens appears well positioned to capitalize on this trend.
On top of that, Valens’ margins look pretty decent too. The company’s EBITDA margin improved over the past quarter and Valens’ balance sheet continued to improve. A share offering on January 29 gave the company $ 40 million in additional growth capital. There is speculation that Valens could use this capital to expand into the US. That said, this is currently just speculation.
I think Valens is in a fascinating position as a high-growth option in the Canadian cannabis space. For investors looking for cannabis companies whose numbers support their sky-high valuations, this is a great choice.
Strong cannabis 2.0 potential generating interest in Valens stocks
Valens is also interested in researching alternative cannabis products to diversify its product portfolio. These Cannabis 2.0 products encompass a range of value-added products, including vapes and edibles, and are extremely popular with consumers. Valens’ move to this area is expected to further accelerate sales growth over the long term. In addition, these higher-margin products offer great potential for increasing Valens’ profitability over the long term.
The company recently launched three more vape cartridge products in response to the amazing popularity of its first verse cannabis-related flavor. These products have developed very well and are now contributing to the company’s impressive growth path.
Valens also launched other innovative 2.0 products, including highly potent CBD-dominant oil. Additional product launches such as menthol rubs, bath bombs, premium oils and water drops will take place in the coming quarters.
With an impressive catalog of landmark product launches, speculative investors may want to consider this stock. Valens is a unique high growth company focused on the right (profitable) growth segments that I think are important.
Like this top cannabis choice? Read our analysis of this company:
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This article represents the opinion of the author who may disagree with the “official” endorsement position of a Motley Fool Premium Service or Distributor. We are colorful! Questioning an investment thesis – including one of our own – helps us all think critically about investing and make decisions that will help us get smarter, happier, and richer. As a result, we sometimes publish articles that may not match recommendations, rankings, or other content.
Fool player Chris MacDonald has no position in any of the stocks mentioned. The Motley Fool owns and recommends shares in Valens GroWorks.