What’s Driving the Monster Trend in Valens Groworks Corp (OTCMKTS:VGWCF)?

What’s Driving the Monster Trend in Valens Groworks Corp (OTCMKTS:VGWCF)?


One stock that continues to impress with a series of trending breakouts and strong growth data in the cannabis patch is Valens Groworks Corp (OTCMKTS:VGWCF). Shares are now up another 54% since finding support at the 50-day moving average to kick off the action in April. Helping to reinforce this story, the company just announced strong financial results for the first quarter of fiscal 2019.

According to the release, the company noted that revenue increased to $2,220,200 for the first quarter of 2019 compared with nothing in the same period in fiscal 2018 and gross profit increased to $850,525, or 38.3% of revenue, for the first quarter of 2019 compared with $nil in the same period in fiscal 2018. It also reported a strong balance sheet with $20,552,286 in cash and short-term investments and a net working capital position of $26,391,610 as at February 28, 2019, and noted that, subsequent to quarter end, $43,125,000 gross proceeds were raised through bought deal financing, providing a strong cash position for the execution of the company’s growth plan.

Valens Groworks Corp (OTCMKTS:VGWCF) promulgates itself as a biotechnology company that engages in the scientific research of phytopharmaceutical material primarily producing cannabis and cannabis related products.

It is also involved in the analytical laboratory testing of cannabis. The company has collaborative research partnerships with UBC Okanagan and Thompson Rivers University.

Valens Groworks Corp. is headquartered in Kelowna, Canada.

Moreover, this is a research-driven Canadian cannabis company focused on downstream secondary extraction methodology, distillation and cannabinoid isolation and purification, as well as associated quality testing with three wholly-owned subsidiaries located in and around Kelowna, BC.

Subsidiary Valens Agritech holds a license to cultivate cannabis and produce cannabis oil under the Cannabis Act, as well as a license to conduct analytical testing for the cannabis industry. VAL currently has extraction processing and supply agreements with various leading producers across Canada. Subsidiary Valens Labs is a Health Canada licensed ISO 17025 accredited cannabis testing lab providing sector-leading analytical services and has partnered with Thermo Fisher Scientific to develop a Centre of Excellence in Plant Based Science.

Subsidiary Valens Farms is in the process of becoming a purpose-built facility in compliance with European Union (EU) Good Manufacturing Practices (GMP) standards, ensuring the product from this facility can be exported anywhere in the world where Cannabis is nationally legal for medical or adult usage purposes.

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As noted above, VGWCF just announced strong financial results for the first quarter of fiscal 2019.

The chart shows 60% added to share values of the company over the past month of action. Moreover, the listing has benefitted from a jump in recent trading volume to the tune of above 620% beyond what we have been seeing over the larger time frame.

Tyler Robson, CEO of Valens, said, “The first quarter of 2019 was a key inflection point for Valens as we accelerated our ramp up into commercial production, generating revenues of $2.2 million compared with $nil in the same period of fiscal 2018. This initial momentum was driven by contracts signed late in 2018 to provide cannabis extraction services to leading licensed producers, including Canopy Growth and Harvest One. The growth in the size and frequency of shipments from these contracts increased throughout the quarter and into the second quarter of fiscal 2019, while at the same time we also secured a number of new, large scale contracts with other leading licensed producers including with Organigram, Tilray, and The Green Organic Dutchman. We believe our success in securing these large scale contracts with industry leading customers validates our business model and the quality of the service we are able to provide. Further, they necessitated our recent capacity expansion to 240,000 KG of dried cannabis and hemp annually, which has made us the largest extraction company in Canada, with an unparalleled breadth of service encompassing all the major extraction methodologies, as well as formulation, product development and analytical testing solutions.”

Now commanding a market cap of $374.22M, VGWCF has a significant war chest ($25.2M) of cash on the books, which must be weighed relative to about $961K in total current liabilities. The company just booked its initial revenues and gross profits, as noted above. We will update the story again as soon as further details emerge. Sign-up for continuing coverage on shares of $VGWCF stock, as well as other hot stock picks, get our free newsletter today and get our next breakout pick!

Disclosure: we hold no position in $VGWCF, either long or short, and we have not been compensated for this article.

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