Just when the Punter was beginning to wonder if there was any logic to holding shares in CropLogic (ASX code CLI), the share price doubled in a week.
The heavy trading in the company's stock appears to have been a slightly delayed response to news the company has leased a farm and been granted a licence to grow hemp in Oregan.
It expects to harvest between 80,000-150,000 kg of hemp, beginning in September, and already has a non-binding letter of intent with a Canadian cannabis processor, Nextleaf Solutions.
Direct farming is a new departure for CropLogic, whose main business is providing agronomy advice supported by high-tech monitoring of soil and crops.
The farm will be used as a showcase for the company's technology, as well as (hopefully) producing a profitable crop.
The Punter is now showing a modest profit on CLI, but is happy to hold on.
Taking a deep breath, meanwhile, he has bought 10,000 shares in Victorian fodder business Wingara AG (WNR).
Buying into a company that is selling for nearly 50 times earnings and has a debt-to-equity ratio of 76 per cent has to be considered courageous, if not downright rash. Particularly as there is little interest in the shares and the current spread between the buying and selling price means an instant paper loss of 3.5c or 16 per cent.
The company has forecast an increase in sales from $10.9m in the last financial year to $29-$30m this year, based mainly on the demand for its fodder in Asia.
Wingara AG fell behind on its plans to build hay inventories because of its focus on improving its recently acquired AustCo Polar cold storage business.
The delayed fodder season is likely to delay some revenue, but with forecast outgoings of $5.5m in the current quarter, and cash of $2.7m, it needs at least half the previous quarter's income to remain in the black.
- The Punter has no financial qualifications and no links to the financial services industry. He owns shares in a number of companies featured in this column.
