Flora Development (NASDAQ:FLGC) surged as excessive as $7.95 in afternoon buying and selling Wednesday, an increase of greater than 50% to the best stage the inventory has touched since its preliminary public providing in Might.
Colombia-based Flora, which simply introduced plans to maneuver its company headquarters to Miami from Canada, cultivates hashish and processes it into medicinal-grade hashish oil and different merchandise, which it provides to pharmacies, cosmetics firms, and medical clinics.
Its shares had been pushed upward by the corporate’s announcement Tuesday that it had signed a letter of intent with Avaria for a three way partnership relating to Avaria’s CBD pain-relieving cream, KaLaya. The cream, already bought in Canada, will now even be bought by Flora’s distribution channels in Latin America. The income from the sale of KaLaya merchandise can be cut up, boosting the worth of Flora’s distribution channels, Flora mentioned. As well as, Flora’s cultivated hashish can be utilized in KaLaya’s merchandise.
The deal is probably going the primary of a number of for Flora. The announcement got here on the heels of a call by the Colombian authorities to permit the manufacturing, sale, and export of cannabinoid ingestibles.
Flora will profit immensely from having the ability to export its merchandise as a result of it has vital price benefits. It grows its hashish at a 247-acre cultivation and extraction facility in Bucaramanga, Colombia, the place the local weather is appropriate for that function twelve months a yr. As a result of it may well develop its crops outdoors with 12 hours of daylight, and due to Colombia’s decrease labor prices, Flora says it may well produce dried hashish flower at a price of $0.06 per gram — in comparison with the everyday price of $1.98 per gram within the U.S., the place the crop is commonly grown indoors.
The corporate has but to problem an earnings report since going public, so loads of uncertainty stays when it comes to how worthwhile Flora may be.
Its capacity to undercut its rivals by promoting dried hashish flower at decrease prices makes the corporate an attractive funding possibility. Nonetheless, it is also a small cap that reported solely $106,000 in income final yr whereas shedding $14.17 million on the underside line. Traders are more likely to be skeptical about this firm till it releases an earnings report that reveals vital progress.
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