shallow focus photography of cannabis plant

Neptune Wellness Solutions (NASDAQ:NEPT) is a diversified wellness company which provides nutraceuticals, legal cannabis and hemp products and also consumer packaged goods. They have over 20 years of expertise in nutraceutical manufacturing and cannabis extraction. They have recently had some news and the Neptune Wellness stock looks like it has potential for a move.

News

The were recently granted a US patent covering a method of extracting and isolating compounds from the plants of the Cannabis genus at low temperature using cold organic solvents. Leveraging this patent, the company plans to pursue licensing opportunities for its unique extraction process with manufacturers.

Neptune have 8 brands in the company covering cannabis, organic food and beverage and personal care and beauty. These are all large, high growth product categories which target fast growing markets. Some of these market figures are: a $3B Canadian Cannabis sector, Nutraceuticals worth $400B, Organic packaged food & beverage at $36B, 19B for Organic personal care & beauty and a Household consumable products market worth $380B.

Earnings

The latest earnings (quarter ending June 30th) show that the companies revenue is up 10% from the same quarter in 2020. Cost of sales rose by 90%, affecting the gross profit. The company has $48.5M of cash and cash equivalents and current liabilities worth $29.9M.

Technicals

The Neptune Wellness stock price has just broken above the 9 daily EMA. It has nearly its daily average volume, but only 1.5 hours into the day. Interest in the stock is rising. Currently priced around $0.55 and being a small cap company, this winter season could prove to be great for Neptune. Small caps make the greatest gains at the end of the year and IWM (a small cap ETF) is currently breaking out. The chart also has a gap fill from $0.90 to $1.06 (there is also a gap between $2.18 and $2.58). A push to $1 will happen if volume in the stock continues to rise. It has a float of 146M shares and a market cap of $$112M.

Overview

We would look to see higher highs in the stock to provide some support behind the move. The cheap price interests us and we believe many small companies will see strong growth this quarter. A push to $1 is possible.

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