Why Marijuana Stock Village Farms Soared 90% in February -- and 12% on Friday
What happened
Village Farms International (NASDAQ: VFF) stock soared 89.8% last month, according to data from S&P Global Market Intelligence. Shares tacked on another 12.1% on Friday -- the first day of March -- before the Nasdaq halted trading, bringing their year-to-date 2019 gain to a whopping 267%.
The Canadian company is an established player in the greenhouse-grown, premium-quality produce business in North America. In 2017, it entered the cannabis space via a 50-50 joint venture, Pure Sunfarms, with Emerald Health Therapeutics (NASDAQOTH: EMHTF), a Canada-based, medical-marijuana research company. The partners recently completed conversion of Village Farms' Delta-3 greenhouse in British Columbia into a cannabis-growing facility.
For some context, the S&P 500 index returned 3.2% in February, and has returned 12.3% so far this year.
Image source: Getty Images. Village Farms is entering the U.S. hemp-derived CBD market, thanks to the U.S. Farm Bill.
So what
February
We can attribute Village Farms International stock's powerful performance last month to a couple of catalysts. First, on Feb. 8, the company announced that Pure Sunfarms entered a supply agreement with Ontario, Canada's largest province, to supply its stores with cannabis products for the recreational market. This is Pure Sunfarms' first supply agreement with a provincial government distributor of cannabis.
Secondly, Village Farms shares got a boost twice during February stemming from the stock uplisting from the over-the-counter (OTC) exchange to a major U.S. exchange, the Nasdaq. Such a move typically increases a stock's trading volume and liquidity by improving its visibility and attracting more institutional investors, some of which don't or can't invest in OTC stocks.
On Feb. 15, shares jumped 21.1% following the company's announcement that it received approval to list its shares on the Nasdaq. The stock then gained 22.4% over the two-day period following the actual uplisting on Feb. 21. Moreover, investor anticipation following Village Farms' Jan. 21 announcement that it applied for uplisting likely helped lift the stock prior to the company getting the green light from the Nasdaq.
Data by YCharts.
March to date
Village Farms stock shot up 12.1% on Friday, before the Nasdaq stopped trading in the stock at 2:23:03 p.m. EST. Trading will remain halted until the company "has fully satisfied Nasdaq's request for additional information," according to the press release. That's all we know.
The catalyst for Friday's rise was Village Farms' announcement that it's partnering with Georgia-based Nature Crisp, which it describes as a "pioneer" hemp-farm operator, in the "outdoor cultivation of high-cannabidiol (CBD) hemp and CBD extraction in multiple states throughout the United States." (CBD is a chemical found in the cannabis plant -- both marijuana and hemp -- that's been associated with various medicinal benefits.) The joint venture, Village Fields Hemp, will be 65% owned by Village Farms and 35% owned by Nature Crisp, a private company that's part of the Jennings agricultural group.
Village Farms is just the latest company to throw its hat into the U.S.-hemp-derived-CBD ring. The floodgates burst open upon passage of the U.S. Farm Bill, which became effective on Jan. 1 and made growing industrial hemp legal across the country.
The year-to-date 2019 and bigger pictures
Village Farms' 2017 entrance into the cannabis realm lit a fire under its stock, which previously had been a longtime underperformer.
Data by YCharts.
Data by YCharts.
Now what
Investors should be getting some material news soon. In its Feb. 15 press release announcing that it received approval to list its shares on the Nasdaq, Village Farms International said that it expects to report its fourth-quarter and year-end 2018 financial results after markets close on Wednesday, March 13. It also noted that it would issue a confirmation of the date and time for the release and the conference call approximately two weeks in advance.
As of Friday, there's been no such confirmation.
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Beth McKenna has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.