The process of growing cannabis is very complex and requires a lot of energy. Several Canadian LPs are trying to make the process more environmentally friendly and we are favorable on this focus.
One Canadian LP has taken this focus to heart and is focused on reducing the amount of organic grade compost. The company, INDIVA (TSX:NDVA.V) (OTS:RMKXD) is focused on doing this through its proprietary product; BioRoter.
Many investors are not aware of the denaturing process that licensed producers must complete. Although there are many solutions for these companies, most are not environmentally friendly.
An Essential Process for Cannabis Producers
The denaturing process is essential as it reduces bio-security risks, destroying pathogens during the composting process. Through this process, INDIVA is creating a high-quality compost that, when used as an organic soil for farming, improves the fertility, structure, and water retention in the soil.
Installed last summer, INDIVA plans to establish the first sustainable composting program in London, Canada. All excess plant waste production in the company’s facility will be composted into fertilizer and then donated to local organic farmers to promote sustainable agriculture. This is an important element for farmers who have difficulties sourcing organic compost and fertilizer.
When the BioRoter is in full gear, it will process the compost in as quickly as one week and regenerate up to approximately 100 kilograms of organic soil amendment. Once the organic compost is added to the soil, the process helps to reduce the carbon footprint. If the waste product were to be incinerated, more carbon would be returned to our atmosphere, however, when added to the soil as a beneficial amendment, it will not return carbon dioxide to the atmosphere.
An Undervalued and Underappreciated Opportunity
In 2018, INDIVA has been under pressure and the shares have fallen more than 40% during this time. We think this sell-off is overdone and the Canadian cannabis producer has several potential event driven catalysts in the pipeline and we are favorable on this opportunity. The most significant catalyst will be the granting of a sales license from Health Canada, which is expected in the second quarter of 2018.
We are favorable on the fully funded growth initiatives, especially the planned expansion to 40,000 sq. ft. and is expected to be completed before the end of the year. In the near-term, INDIVA expects to harvest two batches and is currently cultivating medical marijuana.
These potential catalysts will represent significant milestones for the company and we are favorable on the shares at current levels. The valuation is very attractive, and we are monitoring the shares closely.
A Stock Investors Need to Watch
We are favorable on INDIVA and believe that investors should keep an eye on this stock. INDIVA is led by an experienced management team that is focused on creating value for its shareholders. INDIVA is focused on producing a premium product and the production team has decades of combined experience legally growing medical marijuana in an indoor-grow environment.
INDIVA is laser focused on becoming a global marijuana brand recognized for high quality cannabis products and excellent client care. The company will significantly expand its product line as marijuana laws continue to change in Canada. The company is in the early innings of its growth cycle and we think this is a company investors need to keep an eye on.
We are bullish on INDIVA’s continued execution and visible growth strategy, the significantly stronger balance sheet which fully funds the company’s expansion, the management team, and the current valuation.