Farmmi Shares Are Unbelievably Cheap Despite Blockbuster Fiscal Stats For exposure to international markets, an ultra-low valuation and improving financials, Farmmi (FAMI) stock deserves a top spot on your watch list.
By David Moadel
This story originally appeared on StockNews
For exposure to international markets, an ultra-low valuation and improving financials, Farmmi (FAMI) stock deserves a top spot on your watch list.
Amazingly, anyone with a dollar and a brokerage account can own a piece of China-based agricultural products processor and distributor Farmmi < NASDAQ:FAMI>. Despite the positive developments surrounding the company, FAMI stock is surprisingly affordable and generally unappreciated on Wall Street.
To a certain extent, this might be the case due to investors' negative sentiment toward Chinese investments. As the nation cracks down on a number of private businesses, some traders have opted to avoid China-based companies altogether.
That's certainly a decision which people have a right to make. Yet, it's unfortunate if some folks are dismissing Farmmi simply because it's a Chinese company.
Indeed, there may be a strong argument in favor of owning Farmmi shares as they're currently trading at a significant discount. It's not psychologically easy to catch a proverbial falling knife, but value seekers should definitely keep their eye on Farmmi.
A Closer Look at FAMI Stock
Okay, I'll admit it. I made a bullish recommendation on FAMI stock on Nov. 16 of last year, when the share price was 30 cents.
Fast-forward to late January 2022, and the stock was trading at 19 cents. In other words, the Farmmi share price declined by at least one-third since my bullish call.
If you'll forgive me for that, then perhaps you'll allow me to point out the insanely low valuation of FAMI stock.
Consider that Farmmi's trailing 12-month price-to-earnings (P/E) ratio is 1.71. That's not just low - it's in the basement, as far as P/E ratios go.
Granted, Farmmi doesn't pay a dividend. Therefore, FAMI stockholders will need to see some share-price appreciation in order to book a profit.
Hopefully, the stock will turn a corner soon, so that I won't have to admit to another bad call and the shareholders won't suffer more losses.
Booming 'Shroom Business
Let's not mince words here. Farmmi sells mushrooms, and lots of them. The company has other minor business interests, but for the most part, Farmmi is all about the 'shrooms.
Did you ever imagine that you might invest in a Chinese mushroom seller? It's an investment worth considering, though, as Farmmi is faring well in this niche business.
For instance, Farmmi subsidiary Zhejiang Farmmi Biotechnology Co., Ltd., just garnered a follow-on product order. This order was for dried shiitake mushrooms, placed by one of Farmmi's long-term customers.
In the press release, Farmmi Chairwoman and CEO Yefang Zhang observed that her company is "seeing a higher level of customer activity than is typical for this time of year as positive demand tailwinds from last year continue into 2022."
In case that news isn't enough to convince you, then perhaps this will persuade you of FAMI stock's upside potential. Just recently, Farmmi subsidiary Zhejiang Farmmi Food Co., Ltd., received a government designation as a key municipal-level agricultural leading enterprise.
Playing a Leading Role
Along with that designation, the Farmmi subsidiary will also receive a monetary award.
It's great news for the company, and Zhang had every right to brag upon the receipt of the designation and monetary award.
"We expect to play a leading role as we provide market-oriented, professional and standardized services for all aspects of agricultural pre- to post-production, and promote high-quality, advanced green development of rural industries in Lishui City," the CEO stated.
Still not convinced? Fine - let's look at some financial statistics to drive the point home.
Farmmi's fiscal performance in fiscal-year 2021 was nothing short of spectacular. Compared to fiscal-year 2020, the company posted a 39% increase in revenues, a 10% expansion in gross profit and - best of all - a 188% growth in net income.
The Bottom Line
It doesn't make sense, really. Farmmi is selling plenty of mushrooms and booking outstanding revenues.
Yet, the share price is in the gutter. Is this just an instance of Wall Street dumping anything and everything related to Chinese commerce?
If so, then there's an opportunity for open-minded investors here. With that in mind, feel free to consider a long-term position in the international mushroom trade with FAMI stock.
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On the date of publication, David Moadel did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
David Moadel has provided compelling content - and crossed the occasional line - on behalf of Crush the Street, Market Realist, TalkMarkets, Finom Group, Benzinga, and (of course) InvestorPlace.com. He also serves as the chief analyst and market researcher for Portfolio Wealth Global and hosts the popular financial YouTube channel Looking at the Markets.
FAMI shares were trading at $0.20 per share on Monday morning, down $0.00 (+1.15%). Year-to-date, FAMI has declined -10.07%, versus a -6.15% rise in the benchmark S&P 500 index during the same period.
About the Author: David Moadel
David Moadel has provided compelling content – and crossed the occasional line – on behalf of Crush the Street, Market Realist, TalkMarkets, Finom Group, Benzinga, and (of course) InvestorPlace.com. He also serves as the chief analyst and market researcher for Portfolio Wealth Global and hosts the popular financial YouTube channel Looking at the Markets.
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