Small-cap stocks are generally classified as having a market cap of between $300 million to $2 billion. They are often young companies with significant growth potential, but are less stable than larger, more established peers. In this article, we will take a look at an interesting small-cap stock with potential for big gains.
Based in Appalachia, AppHarvest are pioneers in vertical farming. They went public as recently as February 2021, via a merger with a special purpose acquisition company. They are still in the developmental stage, having earned $2.3 million in the first quarter of 2021. The company aims to be the world’s largest indoor commercial farm. If their business model succeeds, then AppHarvest’s market cap could soar beyond the current valuation. For now, they are only growing tomatoes.
Is Indoor Farming a Good Idea?
Although images of stacked warehouses and sterile environments illuminated by high-powered LED lights may hurt some purists, many industry leaders agree that high-tech vertical farming operations are the future of agriculture. They are able to operate virtually anywhere, pretty much invincible against pests, pathogens and poor weather and are able to produce local, fresh, high-quality, low-carbon food year round.
This technology means minimal transportation costs and carbon emissions. With a vastly growing human population, it also utilizes space, stacking crops on vertical layers. This means the sky is literally the limit. Vertical farming can put abandoned buildings to use and can beautify cities.
AppHarvest’s Innovative Tech
AppHarvest aims to combine innovative technology with natural resources and farming know-how. They only use recycled rainwater, and they utilize a 10-acre retention pond and circular irrigation system. This eliminates harmful agricultural water runoff and makes the best use of one of the most precious resources. Their lighting system combines sunlight, LED’s and high-pressure sodium growing lights. The roof of their facility is made of diffused glass which allows for a maximum amount of sunlight to enter.
Their team has developed intelligent robots that help to manage the farm. They can evaluate crop health and provide real time information. They can also precisely predict crop yield. They employ robotic crop harvesters who work alongside crop care specialists of the human kind.
No pesticides are needed. Instead, integrated pest management is utilized, combining highly trained employees and sophisticated technology. Beneficial insects control the pest population, along with hundreds of sensors and cameras. AppHarvest uses bee pollination, with over 500 beehives being used to pollinate more than 700, 000 tomato plants.
AppHarvest produces a year-round yield and expects to produce 30x more food per acre than traditional farming. They use the latest technology to sort and ship the expected 45 million pounds of tomatoes. They use autonomously operated carts that move along pre-programmed routes. Sensor-driven grading technology detects sugar content and softness during quality control.
Some AppHarvest Investor Information
Earlier this year, the company raised $475 million and went public through a special purpose acquisition company (SPAC) merger with Novus Capital. AppHarvest stocks are currently available to purchase for just over $12 with a market cap of just over $1.2 billion. The common stock of AppHarvest Inc. is publicly traded on Nasdaq under the ticker symbol APPH. Shares cannot be directly purchased, but can be purchased through your personal brokerage firm.
Recent AppHarvest news releases and financial reports can be found here. AppHarvest’s first quarter results can be found here. Their net sales in the first quarter were $2.3 million, with a projected full year outlook of $20 to $25 million. They have 1 active facility with 45 acres of operational land.
AppHarvest recently secured $91 million of financing with the sustainably-focused investment firm Equilibrium Capital. This will fuel the future construction of 12 high-tech indoor farms by 2025. Their second facility, in Richmond, Kentucky, is currently under construction. In addition, they have three other farms in Kentucky under construction. These include a 15 acre facility to grow leafy greens, a 30 acre facility to grow strawberries and a 15 acre leafy green facility.
AppHarvest also promises to pay above-market wages to their employees and pledges to look after the communities where it operates. They have positioned their facilities within a one day drive of 70% of the U.S. population, massively decreasing transportation costs and carbon footprint.
The size and scalability of AppHarvest’s farms show that it is stronger than most of its agtech competitors. It’s expansion plans, and it’s consistent execution, make it a leader in the growing agtech industry.
“AppHarvest is laser focused on scaling its mission. The financing we’re announcing today demonstrates the expected viability of high loan-to-value, non-dilutive capital financing as we remain on track to develop up to 12 high-tech farms by the end 2025”, said AppHarvest president David Lee.
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AppHarvest is among the first generation of agtech farms. Using AI, automation, and innovative water and light systems, AppHarvest is at the forefront of new food technologies. All agtech businesses provide the same sustainability and efficiency goals. However, AppHarvest has a massive competitive edge when it comes to the size and scalability potential of their farms.
What may not be widely known is that AppHarvest has a long term distribution agreement in place to reach top grocers in the U.S.. They have positioned themselves really well to capitalize on a general seismic shift towards plant-based, locally grown food.
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