From highs of $5.48 CAD in March, TGOD stock has lost a whopping 45%. Now, with The Green Organic Dutchman (TSX:TGOD) (OTCQX:TGODF) selling for $3.02 on the TSX, it is hard to predict where shares will go next.
Also not helping the case is the fact that head office has been quiet. Very quiet. With shares declining and little t0 no news helping to change the direction, investors are in the dark.
One thing to bear in mind is an overall "Sell" rating TGOD stock currently receives from stock analyzer Nysenewsroom. Whether you want to place much importance on these ratings is an investor choice. It hasn't always been this way though; The Green Organic Dutchman was firmly on the "Buy" spectrum from several analysts only in March.
TGOD Stock
One of the biggest concerns regarding this company seems to be its emphasis on quality. That is only a bad thing when we consider the cost that quality entails. And while we all want good products on the shelves, unfortunately, from an investment point of view, not cutting costs to drive profits will likely impede share price.
At the end of the day, investors need to see profits.
On the other hand, focusing on organic products is liked by analysts at Jefferies, for example, who feel TGOD stock has a potential upswing of 40% ahead because of it.
Focusing on organic cannabis or premium cannabis is what The Green Organic Dutchman is all about. The company has run its own surveys and found that 61% of medical cannabis users and 50% of adult-use recreational cannabis users prefer organic cannabis. That's a nice percentage considering organic products command higher prices and profit margins.
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But we do need to keep in mind that those surveys were run by TGOD itself. And if that is the case, TGOD stock is hardly reflecting it in recent months.
But perhaps the company is simply in the throes of a sector-wide lull? It's very probable.
The company has some impressive metrics to consider:
- Market cap sits around $831 million CAD at present;
- Annualized production run rate is expected to hit 219,000 kilograms of cannabis by late 2020.
Both those points, in particular, keep TGOD stock investors hanging in there right now. Akin to this, the company has a supply deal with Canada's largest province, Ontario. And further, it signed a distribution agreement with Philippe Dandurand Wines' Velvet Management—the largest wine distributor in Canada.
The Takeaway
With the market in a lull, and head office quiet, it is hard to predict where TGOD stock will go next. But investing in premium cannabis is a long-haul choice in a new industry. It will take time to establish the quality difference between brands and for people to assess what they really want from their product.
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