Vegalab Inc (OTCMKTS: VEGL) is a company that we’ve covered in great detail in the past. However, it has been a few months and it was time to dig back in. Nonetheless, things seem to be looking better now than ever. In particular, we’re impressed with the company’s strong ramp in revenue, leading to expectations of $30 million being generated in the year 2018.
What Is Vegalab?
VEGL is a company focused in the agrochemicals area. In particular, the company creates products that replace the need for pesticides while proving to be beneficial to health and yield associated with commercial crops. The company’s various products all fall under one of five categories. Thos include: biocontrol agents, insecticides, fungicides, soil inoculants and fertillizers.
Gearing Up For Serious Growth In Revenue
Recently, VEGL released their financial results for fiscal year 2017. During the year, the company increased revenue by 17.7%. Ultimately, the gains in revenue are the result of the introduction of a new revenue stream. The stream comes from a newly acquired packaging business known as M&G Packaging. For VEGL, the company came onto the books in October of 2017, and in the short time to the end of the year, generated $2.13 million in revenue. That alone is a bit more than the company generated in the full 2016 year.
While 17.7% growth in revenue is great, what we could see in 2018 could make that look like a drop in the bucket. Recently, VEGL announced that it has entered into agreements with two fo the twenty-five largest agricultural retailers in the United States. In fact, one of these retailers agreed to a minimum purchase requirement of $13 million in 2018. M&G Packaging is also a big revenue driver, generating $8.6 million in 2016. Recently, the company invested a great deal of money into the process and as a result, is expecting to see growth. In fact, management says that these improvements could lead to growth in production by around 200%. With that in mind, experts are estimating that M&G Packaging could drive revenue of more than $17 million for Vegalab.
Finally, VEGL recently announced that it acquired Agronomy Group. This is another producer of environmentally friendly agrochemicals. In fact, Agronomy Group brought 29 new products to the Vegalab line with the acquisition, 10 of which are listed for use in organic agriculture. Due to the synergies between the two companies, it is possible that this acquisition could not only increase revenue, but also increase profitability! As a result, some expect that VEGL could generate revenue of up to $30 million in the year 2018. If that’s the case, revenue this year will be more than 10 times higher than revenue last year.
The Bottom Line
The bottom line here is simple. Vegalab is a company that caught the attention of CNA Finance about 3 months ago. After diving in 3 months later, the growth prospects have only become stronger, leading to expectations of breakout revenue growth and a potential opportunity for those that get in on the ground floor. However, with revenue having the potential to grow 10+ fold this year, we could just be seeing the tip of the iceberg.
Disclaimer- CNA Finance is NOT an Investment Advisor. Our goal is to bring both news and under-discovered stocks to the attention of investors to assist in making smart decisions in the market. CNA Finance is a for-profit company. That profit is generated through three (3) different types of relationships. First and foremost, we work with pay per click and CPM advertisers on banners. We also have affiliate relationships with various companies where we earn a portion of the sales we refer. Finally, we may have relationships with some of the companies or IR firms that represent companies mentioned within our works for which we are compensated in cash and or stock for consulting, investor relations, and Press Release services. TraDigital IR Pays CNA Finance $1,500 per month for research and writing services as well as other digital investor relations tasks provided to Vegalab. Therefore, while we do everything in our power to provide true, well-researched, and well-thought out opinions, in some instances, a potential conflict of interest may exist. CNA Finance encourages all investors to seek professional advice before making any investment decision.
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