The Valens Company Stock Forecast

Mar 04, 2020

Photo by M. B. M.

Originally Posted On: https://financhill.com/blog/investing/the-valens-company-stock-forecast

Valens Company Stock Forecast: The legalization of marijuana presents an interesting paradox. The medical benefits have been proven in a variety of applications, but the most popular method of ingesting the substance is through smoking.

This delivery method brings its own health risks, along with the added concern that it is difficult to ensure the quantity and quality of cannabis-related chemicals that users are consuming.

Fortunately, organizations like The Valens Company are hard at work on overcoming these challenges. They are developing novel chemical extraction methods and designing new delivery systems to ensure that cannabis benefits are accessible to everyone. These researchers are focused on bringing products to market that deliver specific doses and have predictable effects on users.

Examples of the products already available include beverages, vape pens, and edibles. These solutions have the added benefit of allowing users to consume them discreetly, whenever and wherever they feel it is appropriate.

The research conducted by these types of companies begins with exploration of well-known chemicals like cannabidiol (CBD) and tetrahydrocannabinol (THC). However, the goal is to take that study much further.

Cannabis plants contain 400 separate chemicals, many of which may promote wellness. Eventually, scientists hope to catalog these substances and apply them for relief of a wide range of symptoms.

As more US states legalize marijuana, along with nations around the world, demand for cannabis products is growing. Investors want to know how they can be part of this expanding industry. Specifically, is Valens stock a buy?

Valens Company Helps Purify Cannabis Products

Since its 2014 launch, the Valens Company has been dedicated to furthering cannabis research.

Founders started the business, because they were convinced that healthier, safer options should be available for consumers to enjoy the benefits of marijuana without the health risks of smoking.

The company is based in Canada, where it has benefitted from the country’s full legalization of marijuana in October 2018. Today, it is Canada’s third-largest provider of cannabis-related services.

The Valens Company invests heavily in research and development, and that investment has paid off in innovation.

This work has led to improved methods of cannabis extraction, as well as excellence in cannabis purification and formulation.

One of the most important results of this research has been the creation of a method of integrating cannabis oil into beverages and edibles in a way that doesn’t have a negative influence on flavor. One of the biggest objections consumers have to most edibles is the bitter taste of cannabis-infused products.

Cannabis Purification Leads To Higher Demand

When it comes to edibles, the importance of exacting purification and formulation methods can’t be overstated. This method of consumption requires the oil to pass through the digestive system before reaching the bloodstream. As a result, the onset of effects can be a bit longer, and they can last a bit longer as well.

The specifics differ from person to person, which makes it difficult to ensure a consistent, predictable experience. Research completed by the Valens Company aims to reduce this variability, which increases the likelihood that demand for cannabis products will grow.

Thanks to its track record of bringing successful products to market, the Valens Company has an impressive collection of global partners and business relationships.

This is making it possible for the company to expand its international presence, and it now has operations in emerging markets that include Australia, the European Union, and Mexico.

All of that sounds promising, but from an investor’s perspective, the real question is are there profits? Will the company’s growth trajectory generate value for shareholders? In other words, is the Valens Company stock a buy?

Is the Valens Company a Buy?

The Valens Company announced its third quarter earnings in November 2019. The biggest news was a quarter-over-quarter increase in revenue of 87.1 percent for a total of $16.5 million.

When compared to first quarter figures, the results were even more impressive – third quarter revenues grew by 641.4 percent over first quarter 2019.

Gross profit for the quarter came in at $12.8 million, which is substantially higher than second quarter’s $5.1 million. Adjusted EBITDA went up as well, hitting $9.8 million as compared to second quarter’s $2 million.

Finally, the company’s net income was a strong $5.9 million, which shows things are heading in the right direction when compared with second quarter 2019’s loss of $10.5 million.

The Valens Company Partnerships Are Growing

In recent months, the Valens Company has entered into two major partnerships. One is a four-year extraction agreement with Emerald Health Therapeutics.

The other is a multi-year distillate and emulsion supply agreement with Dynaleo, a leading confectionery company.

Either of these would have been excellent news for the business – particularly shareholders. The fact that both deals went through means a strong likelihood that the Valens Company will achieve new levels of profitability.

All things considered, these partnerships push the Valens Company’s stock into the strong buy category.

As with any investment, purchase of Valens Company stock comes with its share of risks. These are some to consider before you buy.

Risks of Investing In The Valens Company?

The biggest concern that investors face with the Valens Company is its relatively short tenure.

Its move to profitability is quite recent, and there isn’t a lot of data to demonstrate that this progress will be sustained. Investors have to base their decision on available information, as well as projections for the future of the larger industry.

A second risk is the intense competition in all things marijuana-related. Entrepreneurs and investors all over the world know there are big profits coming, and they want to be part of this success.

That means on-going pressure on prices, product selection, and quality, as there will be plenty of alternatives for consumers to try.