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GDNSF Stock Looks Interesting
Low-priced stocks don’t really have the best reputation. While security analysis involves much more than just looking at the nominal share price of a company, penny stocks are generally regarded as much riskier than regular stocks.
Because legal cannabis is such a young industry, many companies aren’t generating as much in sales as companies in other sectors. That means most of them haven’t been able to justify high valuations.
As a result, we see a lot of penny pot stocks trading in the market. While that means they can be quite risky, the growth potential of the cannabis industry means some of those stocks could eventually become much bigger players.
One penny pot stock worth watching right now is Goodness Growth Holdings Inc (CNSX:GDNS, OTCMKTS:GDNSF).
Goodness Growth is a cannabis holding company. Its operations consist of its multistate cannabis company subsidiary, Vireo Health, and its science and intellectual property developer, Resurgent Biosciences.
Goodness Growth manufactures proprietary, branded cannabis products in state-of-the-art cultivation sites and environmentally friendly manufacturing facilities.
The products are distributed through the company’s growing network of “Green Goods” dispensaries and other retail locations, as well as third-party dispensaries.
Note that Goodness Growth used to go by the name of Vireo Health International Inc and trade under the ticker “VREO” on the Canadian Securities Exchange and “VREOF” over the counter in the U.S.
The company changed its name to Goodness Growth Holdings Inc in June 2021, and its shares now trade under the ticker “GDNS” on the Canadian Securities Exchange and “GDNSF” over the counter in the U.S.
At the time of this writing, Goodness Growth stock has a share price of $1.50, so it’s a penny stock. But the company is on track to get much bigger.
Goodness Growth Holdings Inc (OTCMKTS:GDNSF) Stock Chart
Chart courtesy of StockCharts.com
Expansions & Other Recent Developments
In the second quarter of 2021, Goodness Growth completed the planned expansion of its cultivation and processing facility in New Mexico, which is now fully operational. At the same time, it announced the launch of its ground medical cannabis flower products in New York State.
After the second quarter, the company’s subsidiary Vireo of Charm City, LLC signed a definitive agreement to acquire Charm City Medicus, LLC, a medical cannabis dispensary located in Baltimore, MD. (Source: “Goodness Growth Holdings Signs Definitive Agreement to Acquire Charm City Medicus Dispensary in Baltimore, Maryland,” Goodness Growth Holdings Inc, July 9, 2021.)
Goodness Growth expects to transition Charm City Medicus to the Green Goods retail dispensary brand after closing the deal.
Then, on August 19, the company announced the opening of two new Green Goods dispensaries in the state of New Mexico. (Source: “Goodness Growth Holdings Opens Two Additional Green Goods Cannabis Dispensaries in New Mexico,” Goodness Growth Holdings Inc, August 19, 2021.)
Note that these openings follow Goodness Growth’s investments in cultivation operations to prepare for New Mexico’s recreational marijuana program, which is expected to begin in the spring of 2022.
More recently, Goodness Growth’s subsidiary Resurgent Biosciences received a patent from the U.S. Patent and Trademark Office for cannabis-based moist snuff products. (Source: “Goodness Growth Holdings Subsidiary Resurgent Biosciences Receives Patent for Cannabis-Based Moist Snuff Products,” Goodness Growth Holdings Inc, September 1, 2021.)
This creates the opportunity for the company to commercialize a new cannabis product in a format that has been proven to appeal to tobacco consumers.
Simply put, there’s a lot going on with this penny pot stock.
Second-Quarter Results
It helps that the company has been churning out better financials.
In the second quarter of 2021, Goodness Growth generated $14.2 million of total revenue, marking a 16.5% increase year-over-year. (Source: “Goodness Growth Holdings Announces Second Quarter 2021 Financial Results,” Goodness Growth Holdings Inc, August 13, 2021.)
Excluding results from the company’s former subsidiaries in Pennsylvania, its revenue would have risen by 44.5% from a year earlier.
Keep in mind that Goodness Growth achieved this kind of financial growth during the quarter when its wholesale performance in Maryland was temporarily impacted by the company’s move to its recently completed manufacturing facility. Management expects that facility to reach normalized production levels in the third quarter.
Moreover, Goodness Growth Holdings Inc earned $6.9 million of gross profit in the second quarter, which represented 48.6% of its sales. That was a substantial improvement from the company’s $3.6 million of gross profit, or 29.4% of its sales, in the second quarter of 2020.
Goodness Growth Holdings Inc’s adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) came in at negative-$1.0 million in the second quarter of 2021. While the figure was negative, the loss was much narrower than the company’s adjusted EBITDA loss of $1.8 million in the year-ago period.
On its balance sheet, Goodness Growth had total current assets of $42.0 million and total current liabilities of $16.1 million as of June 30. That gave the company working capital of $25.9 million.
Analyst Take
In today’s pot industry, there are plenty of players that are bigger than Goodness Growth Holdings Inc.
But when it comes to pot stocks trading under $2.00 per share, GDNSF stock is a very special one indeed.
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