If you want to see a good example of the sorts of returns you can get from Canadian micro-caps, take a look at Cult Food Science Corp [CSE:CULT / OTC:CULTF]. The company’s shares, listed on the CSE, took off in mid-April and have been off to the races ever since, up a staggering 550% YTD.
Looking at the trading in the stock, it seems to be attracting steady buying activity, with none of the volatility you would expect to see from existing investors taking the opportunity to jump ship. There also seems to be enough liquidity for sizeable chunks of stock to be available for fund managers – the company had a private placement in early June to the tune of CAD 2.5m.
Cult Food Science Corp was trading at CAD 1.76 not long after it went public in February 2022. Subsequent to that, shares dipped down to a mere 13-14 cents in late 2022. Shares do now seem to have rallied from a very cheap level indeed.
Why Cult Food Science Corp is a stock to watch
Cult Food Science Corp is pioneering the commercialisation of lab-grown meat. It has launched a product called Noochies for dogs and cats via its Further Foods subsidiary. While many companies have been focused on vegetarian trends in the human population, a lot of meat products globally are consumed by our in-house quadruped carnivores who would not voluntarily snack down on chickpeas, for example!
Bear in mind also that the meat industry is still a massive contributor to global warming, with a vast methane footprint. Prime culprit is beef farming, which is not only devastating the Amazon rain forest, but also warming the atmosphere. Companies like Cult Food Science Corp hold out the possibility for a major change in eating habits, even among pets.
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Diverse investment portfolio
Cult Food Science Corp was also the sole strategic investor in Brendan Brazier’s Fictions Foods. Brazier was the co-founder and formulator of Vega, a plant-based food supplement company which was sold to Whitewave Foods [NYSE:WWAV] in 2015 for USD 550m. Brazier is probably even better known for his work developing the Beast Burger, the first burger sold by Beyond Meat NASDAQ:BYND.
Cult has now invested over CAD 3.5m in a global portfolio of 19 cellular agriculture and lab-grown meat startups. Among these is Melibio, which has been named one of Fast Company’s Most Innovative Companies in 2024.
Recently, Melibio secured a major CAD 10 million distribution partnership with Aldi in Austria and Switzerland to supply plant-based honey, which will be used across Aldi’s own brands and reach 75,000 stores throughout Europe.
California Cultured Partners
Another example of the portfolio is California Cultured Partners, which has has entered a 10-year commercial partnership with Japanese chocolate giant Meiji [TYO:2269], incorporating the company’s flavanol cocoa powder into several packaged goods distributed by Meiji.
Dark chocolate is second only to beef in greenhouse gas emissions by food product and the chocolate industry also has a long history of contributing to mass deforestation and human rights abuses. California Cultured has developed a sustainable solution. The company makes cocoa in fermentation tanks, a climate-resilient approach that also addresses deforestation and labour exploitation.
“We have a wide ranging, diversified portfolio that gives us exposure to alternative protein, dairy and food production that doesn’t require factory farming,” said Mitchell Scott, CEO of Cult Food Science. “With continual regulatory approvals and near term commercialization opportunities, we believe we are uniquely positioned to benefit from our early bets on many of these promising companies.”
