EnWave Corporation: Overlooked $1.90 Cannabis Stock Poised to Triple

EnWave Corporation Record Results From Disruptive Cannabis Technology

EnWave Corp: Record Results on New Customer Wins

EnWave Corp (OTCMKTS:NWVCF, CVE:ENW) is one of the few cannabis stocks that forgot there was a sell-off in May. Despite the market-wide swoon, in which the S&P 500 lost 6.3% of its value, EnWave stock managed to hold its own, fueled in part by strong interim second-quarter financial results and strong momentum.

On June 12, NWVCF stock hit a new 52-week high of $2.03, for a year-to-date gain of 113%.

Thanks to its in-demand proprietary dehydrating technology, solid outlook, and royalty-bearing licenses with industry giants like Aurora Cannabis Inc (NYSE:ACB), Tilray (NASDAQ:TLRY), and Green Organic Dutchman Holdings (OTCMKTS:TGODF, TSE:TGOD), EnWave’s near- and long-term outlook remains bullish.

As of this writing, EnWave stock is trading around $1.90 per share. A 12-month forecast of $6.00 represents a gain of more than 215%.


EnWave Corp Overview

EnWave’s proprietary dehydration technology helps cannabis get into consumers’ hands more quickly.

The Delta, British Columbia-based company licenses, manufactures, rents, and sells equipment used for dehydrating organic material like cannabis. (Source: “Corporate Presentation May 2019,” EnWave Corp, last accessed June 14, 2019.)

EnWave’s technology is also used in the pharmaceutical, industrial, and manufacturing sectors.

EnWave’s disruptive “Radiant Energy Vacuum” (REV) technology is far superior to other dehydration technologies, allowing its users to uniformly dry organic material and customize the moisture content. That’s not something traditional methods like freeze drying or air drying can do.

What does that look like for cannabis companies? EnWave’s REV technology provides control and consistency, shortening the drying process for cannabis from a period of days to under an hour.

Best of all, this technology is scalable to meet any drying size, and this company owns the patent.

EnWave currently has commercial license agreement with 27 companies and has 12 technology evaluation and license option agreements. The company is also in talks with over 80 other companies.

Aside from its dehydration technology business, EnWave has a wholly owned subsidiary, NutraDried Food, which manufactures “Moon Cheese.” It’s an all-natural cheese snack that you can pick up at Walmart, Costco, Starbucks, Whole Foods, and a host of other retailers. NutraDried is in the process of launching new products and flavors.

Right now, NutraDried accounts for the vast majority of EnWave’s revenue, but the company’s inroads into the cannabis industry have been growing.

That’s evidenced by its recently announced royalty-bearing licenses—based on either a percentage of sales or units produced— with Tilray, Aurora, and Green Organic Dutchman.

By the company’s own projection, revenue from the cannabis industry is expected to “dominate” its 2019 revenue.

NWVCF Stock Information
Market Cap $209.4 Million
52-Week High $2.03
52-Week Low $0.83
Shares Outstanding: 100.9 Million
Float 107.0 Million
50-Day Moving Average: $1.75
200-Day Moving Average: $1.32

(Source: “EnWave Corporation (NWVCF),” Yahoo! Finance, last accessed June 14, 2019.)

EnWave stock has had great momentum all year, advancing 105%. Thanks to strong sales at NutraDried and its growing inroads in the cannabis industry, the company’s stock forecast remains bullish throughout 2019 and 2020.

Chart courtesy of StockCharts.com

Q2 Revenue up 110%, Gross Profit Up 141%

On May 29, EnWave announced that its second-quarter revenue was up 110% year-over-year, at a record $8.8 million. Gross profit increased 141% to $3.1 million. (Source: “EnWave Announces 2019 Second Quarter Consolidated Interim Financial Results,” EnWave Corp, May 29, 2019.)

The company also significantly reduced its net loss to $224,000 from $519,000 in the same period last year.

Adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) for the second quarter of 2019 was $1.0 million, compared to $4,000 in the second quarter of 2018, an increase of $996,000. Year-to-date adjusted EBITDA was $2.2 million, compared to $319,000 in 2018.

EnWave ended the second quarter with more than $20.0 million in cash. It also remains debt-free.

Recent Highlights

  • EnWave signed royalty-bearing license agreement with Aurora for processing cannabis in Canada and the European Union.
  • The company signed a commercial agreement with Green Organic Dutchman, which purchased four large-scale commercial REV machines.
  • It entered into a royalty-bearing commercial license agreement with Calbee Inc, a Japanese snack company, with plans to launch new products in 2020.
  • It is collaborating with the U.S. Army to develop field rations and it sold a second REV machine to them.
  • It inked a royalty-bearing commercial license agreement with Royal FrieslandCampina N.V., one of the largest dairy farms in Europe.

Analyst Take

EnWave Corp is a financially robust company that has been reporting strong revenue growth and making big inroads into the cannabis industry.

While the company has already announced a number of new licenses and sub-licenses, it expects to announce several more this year. This, coupled with rapidly growing revenue from its subsidiary NutraDried, should help EnWave continue to report record revenue and ongoing profitability.