Pot stocks are a dime a lots nowadays. There is no lack of companies out there promoting that their marijuana is greater quality than their peers. For financiers, it makes investing in a cannabis company even more difficult, particularly when it concerns finding up-and-coming stocks.
Being able to tell which stock is a pretender and which one is the genuine deal isn’t an easy job, however this little-known pot stock has a competitive benefit over its peers.
A biotech company that’s relied on marijuana
Amyris ( NASDAQ: AMRS) remains in business of health and health and professes to produce pure components for its customers. In March 2019, the business revealed that it signed a contract worth possibly $300 million with Lavvan, a then-recently formed business. The business agreed to collaborate in bringing cannabinoid products to market, with Amyris focusing on the research and development part of the process.
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In 2019, Amyris tape-recorded revenue of $183 million related to the deal. It represented a modest 12%of the business’s total sales for the year however it’s an interesting growth opportunity for investors.
Why there might be an even larger opportunity for Amyris
The contract that Amyris has in location with Lavvan is an attractive one, however that could simply be the start of its opportunities in the market. The research study found that Amyris’ approach for delivering cannabidiol (CBD) through sugarcane squalane was more reliable than hemp seed oil and other methods of carrying CBD. The business’s Neossance Squalane product was able to provide 10 to 40 times more CBD to the skin compared to other oils.
Hemp seed oil is popular in the cannabis industry. A quicker and more impactful way to provide CBD might open up numerous chances for Amyris in the CBD market. The company has stated it’s applied for a patent to safeguard its approach of providing CBD and other cannabinoids through the use of squalane. Amyris specified that it “thinks it will be the very first company to supply highly pure and efficacious CBD from this innovation at commercial scale.”
If the company can secure a patent on a remarkable approach for delivering CBD, it might be a key differentiator. Not just will that help the company meet turning points related to its agreement with Lavvan, however it could lead to other opportunities within the marijuana market.
Does this make Amyris a buy?
Marijuana could be what sets Amyris’ stock on fire. A patent to produce high-quality CBD could help the business land deals with other companies in the marijuana industry.
The California-based business is still in its early growth stages. On May 8, Amyris released its first-quarter outcomes which saw income growth of 103%from the prior-year period. In 2019, its leading line grew by 140%. In spite of the obstacles and uncertainty that COVID-19 presents for the company and its consumers, Amyris still anticipates to see sales for 2020 to rise by 44%, with repeating sales anticipated to increase by 80%. The difficulty for the company remains the bottom line, where Amyris has remained in the red in all but among its past 10 quarters.
Prior to investing in Amyris, investors should likewise take into consideration the SEC’s previous investigations into the company and Amyris’ failure to come through on guarantees in the past. While the company has high expect the future, that does not indicate they’ll concern fruition. And until its squalane delivery approach can provide proven outcomes, financiers will be taking on some threat if they buy shares of the business.
Presently, the stock trades at a modest 2.5 times its earnings and it could be a deal purchase for long-term cannabis financiers Year to date, shares of Amyris are up almost 40%while the S&P 500 is down by 6%.