Investors have taken a shine to VIVO Cannabis (TSXV:VIVO) (OTCQX:VVCIF) in recent days. VIVO stock is up over 12% according to the Marijuana Index and is trading for $1.01 CAD on the TSXV at present.
Such bullish behavior is drawing attention and analysts at Seeking Alpha are now pegging this stock as undervalued.
Ontario-based VIVO Cannabis is a vertically integrated cannabis producer, operating and licensed in Canada. It has been producing cannabis since 2017.
Analysts have highlighted certain factors about VIVO Cannabis that suggest VIVO stock is undervalued.
Lack of Liquidity on OTCQX
One of the biggest issues facing this stock is a lack of liquidation. Trading on the OTCQX isn’t doing it any favors, and if it can increase liquidity by up-listing to the NASDAQ or NYSE, then VIVO stock may see further gains.
Expansion and Capacity
Expansion is also on the horizon, and this may offer further incentive to invest. The company’s facility in Kimmett is due to be completed in Q4 2019. When finalized, VIVO Cannabis will have 4,000 kgs of annual capacity, produced at low costs. Greater capacity tends to equal greater share value as it leads to an increase in revenue.
In further expansion efforts, VIVO acquired Canna Farms Limited, BC’s first Licensed Producer, in August 2018. With this acquisition, VIVO expanded production capacity further and opened the door to craft cultivation varying its product lines.
Sometimes strong numbers are all a company needs to prove it is currently trading for far less than it’s worth. VIVO Cannabis is certainly a contender here. According to Seeking Alpha:
“Trading at 12x sales with larger revenue growth than peers, Vivo Cannabis seems very undervalued. Keep in mind that competitors operating in the same industry are trading at 77x to 414x sales.”
It seems VIVO cannabis is keeping up with the competition despite trading at a far lower price point.
For example, Cronos Group (NASDAQ:CRON) stock will set you back $29.24 USD per share at present. Cronos reported revenue growth of roughly 174% in 2018. That is impressive, but not quite as impressive as VIVO’s massive 533% growth for the same period. And as stated, VIVO stock is currently selling for just $1.01 CAD.
“For the nine months ended September 30, 2018, the company reported impressive revenue growth of 533% amounting to CAD 3.88 million or $2.93 million.”
It seems analysts are bullish on VIVO stock for good reason. If VIVO Cannabis should be trading at a higher capitalization based on revenue growth and impressive gross profit margin, then now may be a great time to consider this stock.
Featured Image: VIVO