The cannabis sector has been trapped in a nasty bear market in 2021.
The Advisor Shares US Cannabis ETF (MSOS) is down 12% on the year and 40% from the 52-week high.
However, while the broader cannabis sector has struggled, one fast-growing cannabis company has been jumping higher. In fact, this stock is up 130% in 2021, making it one of the best performing cannabis stocks of the year.
Those impressive gains are being driven by:
- 203% sales growth in 12 months
- A new contract worth up to $280 million in 10 years
- Total backlog sales of $101 million, up 25% in 12 weeks
Agrify Corp (NASDAQ: AGFY) is a pick-and-shovel play on the U.S. cannabis industry.
Headquartered in Burlington, Massachusetts, Agrify sells high-tech, indoor growing systems to some of the largest cannabis companies in the country. Here is an image of one of its most popular products – stackable grow units.
Agrify’s stated competitive advantage is that its high-tech grow units, with integrated software, can grow cannabis more efficiently. Agrify claims its products can:
- increase yields
- optimize grow space
- grow more profitably
Agrify’s competitive advantage is being validated by impressive sales growth. Recent second-quarter results showed huge revenue growth from the same period last year.
Here are the highlights from the press release.
Q2 2021 Highlights
- Revenue increased 203% to $11.8 million for Q2 2021compared to $3.9 million for Q2 2020. Revenue increased 69% sequentially from $7 million in Q1 2021
- New bookings were $30.7 million for Q2 2021, which is the highest quarterly bookings total for the company to date
- Total backlog increased to $101.1 million from $82.2 million at the end of Q1 2021
Agrify Has a Robust Sales Pipeline
Looking forward, Agrify should continue growing at an impressive rate. The company recently reported two huge sales deals that should drive more sales growth in the next few years. Here are more details from the press release.
- Signed a definitive agreement with Bud & Mary’s Cultivation, Inc. to install up to 1,200 of Agrify’s Vertical Farming Units (“VFUs”) at its 50,000-square-foot facility
- The partnership is anticipated to generate an estimated $28 million in annual revenue, with up to $280 million expected in the next 10 years
- Agrify will work with THC on the build-out of its 22,000 square foot facility (the “Facility”), including the installation of 159 of Agrify’s Vertical Farming Units (“VFUs”) along with integrated catwalks, integrated grow racks, and pest mitigation solutions.
- The deal is expected to generate up to $45.3 million in revenue over the 10-year contract period.
After the strong quarterly results and news of the new deals, Agrify went ahead and raised its full-year revenue guidance. The company now expects full-year, 2021 revenue to exceed its previous estimate of $48-$50 million.
Agrify Is Crushing It in 2021
Agrify shares began trading on the U.S.-based NASDAQ exchange in early February. Shares were weak for the first four months. However, in July, Agrify bottomed out and began surging higher. Shares were up as much as 180% in 2021. Despite a recent pullback, Agrify is still up 130% in 2021.
The Big Picture on Agrify
Agrify has been a top-performing cannabis stock in 2021, with shares up 130% on the year. Those gains are being driven by impressive sales growth. Agrify revenue was up 203% from last year in recent second-quarter earnings.
Looking forward, Agrify is in position to keep growing because of its leverage to the high-growth U.S. cannabis industry and I expect that to be supportive of shares.
About the Author & Cannabis Stock Trades
Michael Vodicka is an equity analyst with more than 20 years of experience trading and investing. His research has been featured in some of the industry’s most respected publications. He has been investing and leading investors in the cannabis sector since 2013.
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