Vireo Stock Could Take Off If This One Thing Happens

Vireo Health International [stock_market_widget type="inline" template="generic" color="default" assets="VREO.CN" markup="(CSE: {symbol} {currency_symbol}{price} ({change_pct}))" api="yf"] [stock_market_widget type="inline" template="generic" color="default" assets="VREOF" markup="(OTC: {symbol} {currency_symbol}{price} ({change_pct}))" api="yf"] recently reported its second-quarter financial results. These numbers showed enormous revenue growth and expansion, and may have also stopped the selling in VREOF stock.

However, the company still awaits a patent approval, and the stock will probably see little traction until that occurs. This means investors will have to figure out whether VREOF stock can drive returns or if they should move on to other cannabis equities.

Vireo Expands Amid Increased Losses

The company reported revenue of $7.2 million. This represents a 70% increase from year-ago levels when Vireo brought in $4.2 million. Despite the rise in revenue, the Minneapolis-based medical cannabis firm saw a loss of $1.9 million. This fell from the same quarter one year ago, when the firm earned a profit of $120,080. Vireo blamed this loss on increased operating expenses. However, they said expansion into other markets drove costs higher.

Expand the company has. During the quarter, Vireo obtained licenses to operate in Nevada and Puerto Rico. This will permit VREOF to cultivate, manufacture, and sell their product in those locations.

Its home state of Minnesota has only legalized marijuana for medical purposes. Consequently, it has limited its focus to the healthcare side of the business, even when venturing into states that permit recreational use.

Vireo also suffers from a comparative lack of name recognition within the medical cannabis industry. As a result, VREOF stock has not risen as much as names such as Curaleaf Holdings [stock_market_widget type="inline" template="generic" color="default" assets="CURA.CN" markup="(CSE: {symbol} {currency_symbol}{price} ({change_pct}))" api="yf"] or U.K.-based GW Pharmaceuticals [stock_market_widget type="inline" template="generic" color="default" assets="GWPRF" markup="(OTC: {symbol} {currency_symbol}{price} ({change_pct}))" api="yf"].

Vireo’s Future Centres Around Its Vaporizer

Most investors who buy VREOF stock will probably purchase it for the multichannel vaporizer which awaits patent approval in the U.S. This allows users to vaporize two or more types of cannabis within the same dispenser, adjusting the level for each strain of medical marijuana.

Patent approval could become a game-changer for VREOF stock. For now, it remains a $34.25 million company trading at $1.50 per share. It has begun to recover from the lows it saw before earnings. However, in general, Vireo seems to remain on its downward path. It has fallen more than 70% from the $5.06 per share high VREOF stock reached back in April.

However, I think the potential of the patent makes a strong case for a speculative play. Currently, it trades at just under 1.5 times sales and just barely above its book value. Moreover, while the company lost $1.9 million in the previous quarter, it still holds just over $30.3 million in cash. At this rate, it can run for several more quarters before it has to turn back to debt or equity markets.

The Bottom Line on VREOF Stock

The potential of Vireo Health’s multichannel vaporizer makes VREOF stock a worthwhile speculative play. The company showed an inclination for expansion and massive revenue growth in its latest quarterly report. Although losses rose, the fact that moves into new markets drove the red ink will likely win the forgiveness of investors.

VREOF stock is by no means risk-free. The equity has slid for most of the year. Its success also depends on patent approval and ultimately strong sales for its vaporizer.

Such a situation calls for investing with speculative cash only. However, if it can get the patent and win over customers, I see nothing but massive returns for VREOF stock.

The opinions provided in this article are those of the author and do not constitute investment advice. Readers should assume that the author and/or employees of Capital 10X hold positions in the company or companies mentioned in the article. For more information, please see our Content Disclaimer.

 

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Vireo was a market awareness client of Capital 10X.

The opinions provided in this article are those of the author and do not constitute investment advice. Readers should assume that the author and/or employees of Capital 10X hold positions in the company or companies mentioned in the article. For more information, please see our Content Disclaimer.

Will Healy
Will Healy is a freelance business and financial writer based in the Dallas area. In addition to marijuana, energy, and mining stocks, he has also written about real estate, insurance, personal finance, and macroeconomics. In addition to Capital 10X, his articles have appeared on sites such as InvestorPlace, Yahoo! Finance, MSN Money, Kiplinger’s Personal Finance, GOBankingRates, and Seeking Alpha. Will holds a B.S. in Journalism from Texas A&M University, an M.S. in Geography from the University of North Texas, and an MBA from the University of Texas at Dallas. Phone: 416-721-8257. Address: 682 Indian Road Toronto, Ontario M6P 2C9.
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