In the summer of 2011, I was traveling around the world, visiting gold mines and writing about them. One of the companies I covered was Endeavour Mining (EDV.T) – an African-based gold miner.
At that time, gold was selling for USD $1,800 and EDV was trading at $19.
One diligent investor would frequently write to me – with questions about “strip ratio”, “metavolcanics” and “foliated greywacke”.
He never told me how much EDV stock he owned, but it was clearly enough to keep him up at night.
4 years later, the price of gold had fallen to USD $1,090 and EDV was trading $4.60 (down 80%).
The investor called me up one day, his voice dripping with frustration.
“I’m bewildered,” he said, “EDV has more ounces in the ground, higher production, lower cash-costs per ounce, and higher revenue than it did 4 years ago – but the stock price is being killed. I’ve lost a fortune. It’s affected my health, my marriage and my future – and if I’m going to honest – my self esteem.”
I made vague empathetic sounds. Still relatively new to the industry – I didn’t know how to explain to him why he lost money on a profitable well-run company.
Now I do.
The EDV investor got caught up in “market sentiment” – when retail investors flee – or stampede into – a sector like a herd of cows – ignoring the specific strengths or weaknesses of the individual stocks in the sector.
Since the October 17, 2018 Canadian legalisation of rec weed, the stock price of cannabis companies has – to a large degree – been dictated by market sentiment.
Case in point: Crop Infrastructure (CROP.C) – which has a cultivation property in California, two in Washington State, a 1,000-acre Nevada Cannabis farm, 1,865 acres of CBD farms, extraction in Nevada and J.V’s on West Hollywood and San Bernardino dispensaries.
CROP’s portfolio of assets also includes Canna Drink, US and Italian distribution rights to over 55 cannabis topical products and a portfolio of 16 Cannabis brands.
In total, the company has 150,000 sq. ft of built canopy and over 2,900 acres of real estate.
To be blunt, CROP has been kicking ass and taking no prisoners.
But the share price has floated up and down – shadowing the Canadian Marijuana Index – a basket of 20 Canadian Weed stocks that includes Canopy Growth (WEED.T), Aurora (ACB.T), Tilray (TLRY.NASDAQ) and Aphria (APHA.T).
On February 14, 2019 CROP announced that its 49%-owned Nevada tenant, has been issued with a 2019 hemp handler license, hemp nursery and hemp grower licenses covering 1,350 irrigated acres on its 2,115 acres of owned or leased CBD focused lands.
A hemp handler is registered by the licensing department to receive industrial hemp for processing into commodities, products or agricultural hemp seed.
Crop applied for its grower and hemp handler licence – anticipating production and lab extraction of CBD isolate with a “throughput capacity of one ton per day of raw biomass.”
Crop increased the acreage size covered by its hemp licences from 240 acres of cultivation in 2018 – to 1,350 acres of irrigated cultivation for 2019.
For the record, that’s over 1,000 football fields.
The CBD flower off take is to be delivered in shipments of 50,000 dry pounds on a bi-monthly basis with payment to be made plus the cost of delivery of $36.00 per pound to $57.00 per pound depending on quality. Deliveries will start August 2019.
“The synergies and relationship between CROP and our off-take partner continue to evolve,” stated CROP CEO, Michael Yorke. “We believe this is an effective and creative way of financing and developing our growth in a non-dilutive arrangement.”
You can track Crop’s milestones in previous Equity Guru articles.
Crop is a raving beauty
Crop proprietary Hemp Omega powder
Crop has production in Washington
Crop news blitz accelerates
Crop sends troops to Jamaica
Crop defies gravity
Crop buys grow facility
Crop cashes in
Crop adds beverage executives
Crop gears up
Crop CBD barn doors blow open
Crop dispensaries get ready
“With the increased size and operating range of our tenant’s licenses, CROP’s Nevada CBD operations are emerging into a truly world class operation,” stated Yorke. “Our land holdings, micropropagation team, strategies, drying and extraction capabilities and supply agreements will enable us to operate from seeds to isolate to sales in 2019.”
Is CROP a screaming buy?
Trading at .33 with a market cap of $44 million, the obvious answer is “yes”.
The honest answer is, “depends on market sentiment.”
The Brightfield Group of Chicago estimates the North American market for CBD could grow 2,000% in the next 4 years to USD $22 billion.
Crop has a big foothold in this market.
The EDV investor believed in the gold miner’s fundamentals. He hung onto his shares. Since the gloomy summer of 2015, his investment has gone up 350%.
Full Disclosure: Crop is an Equity Guru marketing client and we own the stock.Disclaimer: ALWAYS DO YOUR OWN RESEARCH and consult with a licensed investment professional before making an investment. This communication should not be used as a basis for making any investment.