We recently published a list of 7 Best CBD Stocks To Invest In Right Now. In this article, we are going to take a look at where Village Farms International, Inc. (NASDAQ:VFF) stands against other best CBD stocks to invest in right now.
An essential component of medical marijuana, CBD is the legal, non-psychoactive compound that is used to treat chronic pain, anxiety, and other ailments. Though initially met with skepticism, medical cannabis is rapidly gaining traction in the United States and as of the writing of this article, the use of marijuana for medical purposes is legal in 39 states, in addition to the District of Columbia. The latest state to join the growing list was Nebraska, which voted to legalize and regulate medical cannabis in November 2024.
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Despite the growth, 2024 was overall a very turbulent year for the American cannabis sector. The decriminalization process is going slower than expected and legalization ballot measures in Florida, and South and North Dakota failed to pass. Wholesale prices are also at record lows and despite all the efforts, the legal industry still faces stiff competition from the unregulated black market. As a result, the American Cannabis Operator Index, which tracks the market value of firms in the industry, has fallen by over 50% since a year ago, and more than 90% since its peak in April 2019. A recent survey by Whitney Economics revealed that only 27.3% of cannabis operators nationwide are profitable. According to the US Chamber of Commerce, 65.3% of all small businesses in the US are profitable, so the cannabis sector is trailing far behind the national average.
A recent encouraging development came when President-elect Donald Trump publicly expressed support for recreational cannabis legalization efforts in his home state of Florida. He also backed up the industry’s access to the banking system and the ongoing federal cannabis rescheduling process. Whether this support will actually translate into wide-reaching cannabis reform remains to be seen. However, it puts to rest any previous concerns that Donald Trump could actually cancel the rescheduling process altogether if he gets re-elected since the process is under the purview of the US Department of Justice.
The US Cannabis Council, expressing its optimism for the sector under Trump’s presidency, stated:
“The cannabis community has every reason to be optimistic with President Trump returning to the White House. He has endorsed the SAFE Banking Act and reclassification of cannabis. We look forward to working with his administration to advance meaningful federal reform.”
That said, the withdrawal of Matt Gaetz, a vocal proponent of federal legalization, as Trump’s nominee for attorney-general after allegations of sexual misconduct was highly discouraging for the country’s cannabis advocates. Moreover, a great deal of reforms will still have to get through both the House and the Senate, which will require some level of bipartisan cooperation.
As for the federal cannabis rescheduling process, the Drug Enforcement Administration held preliminary hearings on the matter in December and these are expected to conclude in March. Perhaps the most significant relief from the change will come in the form of tax reform. Currently, companies selling cannabis cannot deduct normal business expenses from their tax bill, costing them more than $2.2 billion in extra taxes than what would be paid if they were treated as mainstream businesses. If federal rescheduling happens, it is expected to improve the overall cash flow of the industry by $3.1 billion in 2026, helping improve the profitability of cannabis companies and giving their investors some much-needed optimism, even if Trump’s other promises go up in smoke.
Methodology
To collect data for this article, we scanned Insider Monkey’s database of 900 hedge funds and picked the top 7 companies operating in the cannabis sector with the highest number of hedge fund investors. When two or more companies had the same number of hedge funds investing in them, we ranked them by the revenue of their last financial year instead. Following are the Best CBD Stocks According to Hedge Funds.
At Insider Monkey we are obsessed with the stocks that hedge funds pile into. The reason is simple: our research has shown that we can outperform the market by imitating the top stock picks of the best hedge funds. Our quarterly newsletter’s strategy selects 14 small-cap and large-cap stocks every quarter and has returned 275% since May 2014, beating its benchmark by 150 percentage points (see more details here).
A farmer in overalls happily harvesting vegetables in a lush greenhouse.
Village Farms International, Inc. (NASDAQ:VFF)
Number of Hedge Fund Holders: 6
Ranking at number 6 in our list of the Best Marijuana Stocks to Invest in is Village Farms International, Inc. (NASDAQ:VFF), one of North America’s leading growers, marketers, and distributors of top-quality, greenhouse-grown fruits and vegetables. The company’s wholly-owned Canadian subsidiary, Pure Sunfarms, is one of the single largest cannabis operations in the world and ranks among the best-selling brands in Canada.
Village Farms International, Inc. (NASDAQ:VFF) exports medical cannabis from Canada to Australia, Germany, the United Kingdom, and Israel. The company’s exports increased 111% YoY in Q3 2024, with continued improvement in sales to its German, Australian, and UK partners. The company also owns 85% of Leli Holland, a recreational marijuana grower based in the Netherlands, and recently commenced cultivation in the country. Sales are set to begin during the first quarter of 2025, allowing Aurora to generate additional annual revenues of approximately $12.4 million by effectively catering to a market with no excise tax and much more favorable product pricing.
Village Farms International, Inc. (NASDAQ:VFF) has long prioritized sustainability and its cutting-edge greenhouses use less water, land, and chemicals. This commitment was exemplified through the establishment of the VF Clean Energy subsidiary a decade ago, which converted landfill gas into clean energy and provided electricity for BC Hydro. Over time, the company transitioned to a renewable natural gas (RNG) model and its Delta RNG facility became operational last year, with royalty payments now being received to provide a healthy stream of profits.
Village Farms International, Inc. (NASDAQ:VFF) has increased its revenue by 17% per year for the last five years. This trend continued in Q3 2024, when the company’s total sales increased by 20% YoY to $83.4 million, beating the analysts’ estimates by around $2.8 million. However, Q3 still ended with a loss of over $212,000, though it was much better than the loss of over $900,000 incurred during the same period in 2023.
Overall, VFF ranks 6th on our list of best CBD stocks to invest in right now. While we acknowledge the potential for VFF to grow, our conviction lies in the belief that some AI stocks hold greater promise for delivering higher returns and doing so within a shorter time frame. If you are looking for an AI stock that is more promising than VFF but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
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Disclosure: None. This article is originally published at Insider Monkey.