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- Hydrofarm Holdings (HYFM): The hydroponics company continues to expand by acquiring companies that manufacture complementary products for the CEA market
- Kalera (KSLLF): The agrotechnology company has become a global vertical farming leader with the acquisition of Germany-based &ever Gmbh
- Village Farms International (VFF): The greenhouse operator saw cannabis sales exceed $100 million in 2021, driven by increasing CBD and hemp sales in the U.S
The growing global demand for food crops and rapid urbanization have put vertical farming stocks into the spotlight. Many InvestorPlace.com readers would know that vertical farming enables organic and chemical-free crops to be grown anywhere all year round. As the environment is typically artificially controlled, weather conditions do not impact yields.
According to Lux Research, the global market size for controlled environment agriculture (CEA), which includes indoor agriculture and vertical farming, could reach $100 billion by 2030. Meanwhile, the global vertical farming market is forecast to grow at a compounded annual growth rate (CAGR) of over 23% between 2022 and 2026. Such an increase would mean a market value of $31.6 billion by 2030.
A number of vertical farming stocks currently boast attractive valuations and offer excellent buying opportunities for long-term investors. In addition, thematic exchange-traded funds (ETFs) are also being launched. A recent example is the VanEck Future of Food ETF (NYSEARCA:YUMY), which is down 12.5% year-to-date (YTD).
With that information, here are three vertical farming stocks that offer lucrative growth opportunities for long-term investors:
|VFF||Village Farms International||$4.3250|
Hydrofarm Holdings (HYFM)
Source: shutterstock.com/Nuttawut Uttamaharad
Our first vertical farming stock, Hydrofarm Holdings (NASDAQ:HYFM), manufactures and distributes equipment and supplies for the CEA market. It is one of the leading hydroponics companies that offer a wide range of high-intensity lights as well as climate control solutions.
Hydrofarm announced Q4 2021 results on March 1. Revenue increased 26% year-over-year (YOY) to $110 million. Adjusted net loss came in at 5 cents per diluted share, compared to an adjusted net income of 2 cents per diluted share in the prior-year quarter. Cash and equivalents ended the period at $26.6 million.
The farming name uses its growing scale to consolidate the fragmented CEA segment. To that end, it has acquired several companies that manufacture complementary products, including growing media and nutrient products for hydroponic and vertical farming.
Despite the potential of the niche market, HYFM stock trades at its 52-week lows, having collapsed 85% over the past 12 months. Shares are trading at 15.17 times forward earnings and 0.86 times trailing sales. The 12-month median price forecast for Hydrofarm Holdings stands at $24.
Source: HotFlash / Shutterstock.com
Next on our list of vertical farming stocks is Kalera (OTCMKTS:KSLLF), an agrotechnology company. It focuses on producing leafy greens in a low-cost and sustainable manner. Kalera branded products are sold in over 1,200 retail locations stateside.
Kalera released Q4 2021 results on Feb. 17. Revenue surged 440% to $1.2 million, compared with $227,000 in the prior-year quarter. Adjusted operating loss stood at $11.6 million. Cash and equivalents ended the period at $16.1 million.
The company currently trades on the Oslo Stock Exchange. Effective May 2022, it will merge with Agrico Acquisition Corp. As a result, it will list on the NASDAQ exchange.
In August 2021, Kalera announced the acquisition of &ever, a German vertical farming company with global operations. The deal will help grow vertical farming operations globally. With ten facilities in operation or under construction, Kalera’s production capacity is expected to reach 17 million pounds in 2022.
However, KSLLF stock has tanked 86% over the past year. Interested readers should keep an eye on the upcoming merger with a view to buy the dips.
Village Farms International (VFF)
Source: bluedog studio / Shutterstock.com
Our last vertical farming stock, Village Farms International (NASDAQ:VFF), develops large greenhouses specializing in hydroponic technology. It currently operates five massive greenhouses that grow various types of produce.
Village Farms issued Q4 2021 results on March 1. Revenue jumped 55% YOY to $72.8 million. In total, cannabis sales jumped to $26.9 million, up from $12.8 million last year. Net income stood at 3 cents per diluted share, down from 12 cents a year ago. Cash and equivalents ended the period at $58.7 million.
The company has shifted from growing fresh produce to growing cannabis, in part due to its extensive greenhouse facilities in Canada. As a result, first-quarter revenue is expected to grow 33% YOY to almost $70 million.
VFF stock trades at its 52-week lows and has dropped 63% over the past 12 months. Shares are trading at 39.8 times forward earnings and 1.3 times trailing sales. Finally, the 12-month median price forecast for Village Farms stands at $13.25.
On the date of publication, Tezcan Gecgil did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.