Veritas Farms Inc (OTCMKTS: VFRM) had a relatively rough trading session in the market, giving up some of the gains that we’ve seen recently. However, the company issued a great 10-K, and I’m expecting that the stock will rebound. So, buying the dip may be a very strong move. Today, we’ll talk about:
- The recent 10-K,
- why buying the dip is likely a good idea; and
- what we’ll be watching for with regard to VFRM stock ahead.
VFRM Issues Strong Financial Results
As mentioned above, Veritas Farms had a rough day in the market yesterday. However, late in the trading session, the company announced its financial results, which will likely serve to send the stock screaming for the top relatively soon. Here’s why:
- Revenue – During the 2018 year, VFRM produced $2,079,981. That figure showed incredible, 86.6% growth over the $1,114,674 in revenue produced in 2017.
- Liabilities – Liabilities are falling as well. In fact, total liabilities fell 55.5% to $934,737 in 2018 from $2,102,453 in 2017.
- Gross Profit – The big story in my opinion is gross profit. During the 2018 year, the company generated gross profit in the amount of $876,314. That’s a 357.8% increase over the gross profit of $191,414 reported in 2017. This is largely the result o gross profit ratios climbing. In fact, the gross profit ratio in 2018 was 42.1%, compared to 17.2% in 2017.
- Inventory – The company’s inventory increased 75.6% from $1,428,758 to $2,508,954 in 2018.
- Total Assets – Finally, assets are climbing as well. At the end of 2018, the company had $7,014,086 in total assets. That’s an increase of 34.6% over the $5,210,740 reported in 2017.
In a statement, Alexander M. Salgado, CEO and co-founder at VFRM, had the following to offer:
2018 was truly a transformative year for Veritas Farms, when all of our team’s strategy, hard work, and determination came together to make us one of the leading fully-integrated hemp companies and brands in the country.
Fueled by increasing consumer interest in the benefits of hemp, our remarkable growth in 2018 was made possible by the significant capital investments at our Colorado farm and production facility, the launch of our Veritas Farms™ brand products, and the expansion of our targeted sales, marketing, and social media programs.
Following the signing of the 2018 Farm Bill in December and moving forward into 2019, we found that a strong foundation for cultivation and manufacturing and our uncompromising commitment to quality enabled Veritas Farms to further expand production levels, build brand awareness with consumers and distributors, and successfully open new domestic and international sales channels, including to some of the largest pharmacy chains in the United States.
We anticipate that this momentum and our expanding sales and marketing efforts have also resulted in record financial results for the first quarter of 2019 as more and more consumers, mainstream retailers, pharmacies, and health care providers take their first steps to incorporate pure hemp extracts into their daily health and wellness routine.
Why This Is A Dip Worth Buying
While the 10-K from Veritas Farms was overwhelmingly positive, it hit late in the day yesterday. Throughout the day, the stock fell 8.55% as investors awaited the news.
Nonetheless, the report further serves to validate my bullish opinion on the stock. No matter what metric you look at, the company’s performance in 2018 was impressive. However, that’s not the only reason to be excited here.
A couple of weeks ago, the company started to mention that its products were in select CVS locations across the United States in press releases. This is overwhelmingly important as VFRM is the first CBD company that I’ve seen get its products into big box retail stores.
With improving margins, climbing profits and assets, and a retail strategy that’s clearly working, it’s hard to argue against buying a dip in VFRM.
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What We’ll Be Watching For Ahead
Moving forward, the CNA Finance team will continue to keep a close eye on VFRM. In particular, we’re interested in following the story surrounding the company’s continued work to expand its retail footprint, increase revenue, decrease liabilities, and provide further value to shareholders. Nonetheless, we’ll continue to follow the story closely and bring the news to you as it breaks!
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