Why Is YGYI Soaring This Week?
With a significant pullback in the U.S. stock market, marijuana stocks are taking a hit as well. Still, even after a market-wide sell-off, Youngevity International Inc (NASDAQ:YGYI) stock is still up quite a bit this week. In this article, we are going to take a look at the latest YGYI stock news and see where the company might be going next.
Strictly speaking, Youngevity International Inc is not a marijuana stock. Instead, it is a omni-direct lifestyle company that combined both the direct selling business model (including e-commerce) and the power of social selling. Headquartered in Chula Vista, California, Youngevity was founded in 1996, so it has been around much longer than most marijuana stocks.
To see why Youngvity stock had such a wild ride recently, here’s a keyword: cannabidiol.
Cannabidiol (CBD) is one of more than 120 cannabinoids identified in hemp plants. Many people use CBD to treat pain. While the substance can be found in cannabis, CBD by itself does not produce a “high” or psychoactive effect.
In August, Youngevity announced that it is entering the CBD market. At its 2018 Convention in San Diego, California, the company introduced the new “Hemp FX” product line, which included three new proprietary blends of hemp-derived cannabinoid products: “Sooth,” “Relax,” and “Uplift.” (Source: “Youngevity Enters the $7.7B Cannabis Market with Hemp FX Product Line,” Youngevity International Inc, August 30, 2018.)
The big news was that last week, Youngevity added two CBD-infused beverage products to the lineup, “HempFX Hydration-Sleep” and “HempFX Hydration-Pure.”(Source: “Two New Hemp-derived Cannabidiol Products Which Leverages YGYI’s Y-DR8+ Beverage Technology,” Youngevity International Inc, October 4, 2018.)
YGYI Stock Chart
Chart courtesy of StockCharts.com
Getting into CBD-infused drinks was a great move in the eyes of investors. On October 9, YGYI stock surged from $6.12 per share to $10.16 per share, marking a staggering gain of 66%.
With the latest pullback in the overall market, YGYI stock has pared some of those gains. Still, the rally on Tuesday was so strong that it makes this two-decade-old company one of the top performers in market. Year-to-date, Youngevity stock is up 88%.
For investors interested in forming their own YGYI stock forecast, it’s important to take into account the growth potential of CBD-related products.
You see, weed stocks are all the rage right now. But within the cannabis industry, cannabidiol could be the new star. According to a new study by The Brightfield Group, the hemp-CBD market in the U.S. could grow to $22.0 billion by 2022. (Source: “Exclusive: New Report Predicts CBD Market Will Hit $22 Billion by 2022,” Rolling Stone, September 11, 2018.)
“What we started tracking this year was an explosion — face mask, bug bites, skin care, topicals,” said Brightfield’s director of research, Bethany Gomez. “It’s being used for everything you can think of — sports, triathlons. People want to buy it for their grandma, for arthritis. Women get it for PMS and endometriosis — common things that people have been using over the counter medications.”
Youngevity International Inc: More Than Just a CBD Play
Mind you, Youngevity International Inc already runs a well-established business outside its latest CBD endeavor.
According to the most recent earnings report, the company generated $44.3 million in revenue in the second quarter of 2018, which was a 6.6% increase year-over-year. Approximately 83% of Youngevity’s revenue came from direct-selling sales, while the remaining 17% came from commercial coffee sales. (Source: “Youngevity International Announces Second Quarter 2018 Results,” Youngevity International Inc, August 14, 2018.)
For the quarter, the company’s adjusted earnings before interest, tax, depreciation and amortization came in at $2.2 million, a substantial increase from the $745,000 earned in the year-ago period.
At the end of the day, keep in mind that Youngevity’s market cap is around $210.0 million. Based on the financial results we have so far, the company is on track to deliver total revenues of over $170.0 million for full-year 2018.
In a market filled with soaring weed stocks, a market cap of $210.0 million on a projected annual revenue of over $170.0 million actually make YGYI stock stand out from a valuation perspective.
Adding in the fact that the company just launched a handful of new CBD products, YGYI stock could be an opportunity for growth-seeking investors.