AgriFORCE Growing Systems (NASDAQ: AGRI) Stock Soars: Is it a Buy?

By Kirsteen Mackay

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AgriFORCE Growing Systems Ltd (NASDAQ: AGRI) stock climbed over 100% yesterday on exciting news. Is this AgTech pioneer an early growth story?

AgriFORCE Growing Systems (AGRI) is trending on Friday, after a good day of trading on Thursday saw the company’s stock climb by 102.37% to settle at $3.42. In after-hours trading, it fell 10%.

What is AgriFORCE Growing Systems?

AgriFORCE Growing Systems Ltd (NASDAQ: AGRI) is a technology company providing AgTech consulting services and growing aggressively through M&A.

The company is developing its operations in the plant-based pharmaceutical, nutraceutical, and other high-value crop markets. It designs suitable facilities with a hydroponics-based automated growing system that enables cultivators to effectively grow crops in a controlled environment.

The company calls this facility design and automated growing system the “AgriFORCE grow house.” It has designed its AgriFORCE grow house to produce in virtually any environmental condition and optimize crop yields to as near their full genetic potential as possible whilst substantially eliminating the need for pesticides and/or irradiation.

Over the next two years, AgriFORCE hopes to construct a small-scale vertical grow house and operate successfully.

The company was founded in December 2017 and is headquartered in Vancouver, Canada.

Why Did AGRI Stock Soar?

AGRI stock soared after the company announced it intends to acquire Deroose Plants NV, one of the world's largest tissue culture propagation companies. Deroose Plants has a leadership position in horticulture, plantation crops, and fruit and vegetables.

Acquisition Highlights

The AgriFORCE acquisition of Deroose is an exciting proposition set to give the buyer some strategic benefits:

  • Deroose’s robust IP portfolio is a strong asset, adding credibility to AgriFORCE’s integrated AgTech business model.

  • It gives AGRI instant recognition as a leader in tissue culture propagation and plant cultivation. This will help in their aim to increase crop yields with a reduced environmental footprint.

  • Together the companies can drive further growth in core markets for the development and trade of horticulture, plantation crops, and fruits and vegetables, building on Deroose’s IP, driving improved genetics and higher yields.

  • AgriFORCE can build on Deroose’s strong financial performance and consistent growth in multiple locations across the world

  • AgriFORCE and Deroose plan for additional growth through expansion into new and high-value crops.

  • Deroose’s specific crop IP enables increased yields per hectare for crops such as rubber, palm and banana.

Ingo Mueller, CEO of AgriFORCE Growing Systems, commented:

“Our two companies are strongly aligned with transforming the agriculture industry through IP, innovative technologies and expertise that enable cleaner, better crops with reduced environmental impact… we believe Deroose’s IP provides significant barriers to entry to potential competitors, given the robust patent estate, and typical timelines to research and develop such processes, which could easily exceed a decade.”

The Deroose acquisition comes hot on the heels of AgriFORCE’s definitive agreement to acquire Delphy, a leading European agriculture/horticulture and AgTech consulting firm.

Financial Metrics Today

  • Market Cap: $51m

  • P/BV: 5

Nine Months Ended September 30, 2021

  • Net Loss: -$3.9m (-$2.6m in 2020)

  • Cash: $9.8m

Previous Financings

A year ago, AgriFORCE borrowed $750,000 worth of senior secured debentures from an accredited investor. These were repaid in full when the company went public via IPO on July 12, 2021.

AgriFORCE received net proceeds from the IPO of $14,388,791 after deducting underwriting discounts and commissions.

Earlier this week, the company announced a planned convertible debt facility up to $20m with an accredited institutional investor. This is to fund the closing of the Delphy acquisition. The debt will be convertible at $2.75 per share. The company will receive an initial $10m followed by an additional $10m at the Company’s discretion.

Ingo Mueller, CEO of AgriFORCE Growing Systems, commented:

“We appreciate the tremendous support of the Investor in providing us this planned convertible debt facility, which we expect to finalize in the coming days. We believe the acquisition of Delphy will be a transformative event for the Company, both financially and operationally, as it provides us first-in-class global consulting operations from which we plan to accelerate deployment of our robust IP portfolio, including our GrowHouse facilities.”

Key Comps

AGRI's rivals and comparable companies include:

  • Evolutionary Genomics (OTCMKTS: FNAM)

  • Bio-Gene Technology Ltd (ASX: BGT)

  • CO2 GRO Inc (CVE: GROW)

  • MP Agro Industries (BOM: 506543)

  • Green Vision Biotech (OTCMKTS: GVBT)

Macro Tailwinds

Certain global macro tailwinds are also spurring interest in AgTech.

Since COVID-19 hit, the world has become increasingly aware of international supply constraints and disruptions. This has been compounded in the field of agriculture, which includes fertilizer for fields, feed ingredients for livestock and labor shortages in the harvesting of fresh produce.

Now Russia’s invasion of Ukraine has sent commodity prices soaring, and further shortages are set to compound the problem for some time to come.

Then, of course, there’s the ongoing worry of climate change and the acceleration of agricultural damage worldwide.

All these catalysts are driving AgriFORCE to strive in its bid to reimagine traditional agriculture.

Investing in AGRI stock

AgriFORCE stock may well be an early growth story in this exciting sector. It's certainly impressing investors with its recent acquisition spree. However, it's still early days and investing in stocks like AGRI come with considerable risk.

Many retail investors prefer funds to individual stocks as financial professionals operate them with inside knowledge and insight.

AGRI shares could alternatively be purchased via a mutual fund to potentially reduce investment risk and volatility.

For instance, AGRI stock is currently present in two mutual funds:

  • The Medical Cannabis and Wellness UCITS ETF (LON: CBDX)

  • Fidelity Nasdaq Composite Index Fund (MUTF: FNCMX)

Junior stocks are speculative and prone to volatility, but AgriFORCE stands to benefit from rising commodity prices and climate change awareness.

If you are interested in small-cap stocks, why not read our IPO coverage?

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In this article:

Topics:
AgTech
Agriculture
Industries:
Industrials
Information Technology
Companies:
AgriFORCE Growing Systems

Author: Kirsteen Mackay

This article does not provide any financial advice and is not a recommendation to deal in any securities or product. Investments may fall in value and an investor may lose some or all of their investment. Past performance is not an indicator of future performance.

Kirsteen Mackay does not hold any position in the stock(s) and/or financial instrument(s) mentioned in the above article.

Kirsteen Mackay has not been paid to produce this piece by the company or companies mentioned above.

Digitonic Ltd, the owner of ValueTheMarkets.com, does not hold a position or positions in the stock(s) and/or financial instrument(s) mentioned in the above article.

Digitonic Ltd, the owner of ValueTheMarkets.com, has not been paid for the production of this piece by the company or companies mentioned above.

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