Did The Underlying Business Drive Harvest One Cannabis' (CVE:HVT) Lovely 345% Share Price Gain?

By
Simply Wall St
Published
February 10, 2021
TSXV:HVT
Source: Shutterstock

Active investing isn't easy, but for those that do it, the aim is to find the best companies to buy, and to profit handsomely. When you find (and hold) a big winner, you can markedly improve your finances. For example, the Harvest One Cannabis Inc. (CVE:HVT) share price rocketed moonwards 345% in just one year. It's up an even more impressive 553% in about a month. In contrast, the longer term returns are negative, since the share price is 58% lower than it was three years ago.

See our latest analysis for Harvest One Cannabis

Given that Harvest One Cannabis didn't make a profit in the last twelve months, we'll focus on revenue growth to form a quick view of its business development. Shareholders of unprofitable companies usually expect strong revenue growth. Some companies are willing to postpone profitability to grow revenue faster, but in that case one does expect good top-line growth.

Over the last twelve months, Harvest One Cannabis' revenue grew by 31%. We respect that sort of growth, no doubt. Arguably it's more than reflected in the truly wondrous share price gain of 345% in the last year. While we are always careful about jumping on a hot stock too late, there's certainly good reason to keep an eye on Harvest One Cannabis.

The image below shows how earnings and revenue have tracked over time (if you click on the image you can see greater detail).

earnings-and-revenue-growth
TSXV:HVT Earnings and Revenue Growth February 11th 2021

You can see how its balance sheet has strengthened (or weakened) over time in this free interactive graphic.

A Different Perspective

Pleasingly, Harvest One Cannabis' total shareholder return last year was 345%. This recent result is much better than the 17% drop suffered by shareholders each year (on average) over the last three. The optimist would say this is evidence that the stock has bottomed, and better days lie ahead. I find it very interesting to look at share price over the long term as a proxy for business performance. But to truly gain insight, we need to consider other information, too. Consider for instance, the ever-present spectre of investment risk. We've identified 4 warning signs with Harvest One Cannabis (at least 2 which are potentially serious) , and understanding them should be part of your investment process.

But note: Harvest One Cannabis may not be the best stock to buy. So take a peek at this free list of interesting companies with past earnings growth (and further growth forecast).

Please note, the market returns quoted in this article reflect the market weighted average returns of stocks that currently trade on CA exchanges.

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This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.
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