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Is Greenlane Renewables (TSE:GRN) Canada’s Best Biogas Play?

Posted on May 28, 2021 by Dylan Callaghan

Disclaimer: The writer of this article or employees of Stocktrades Ltd may have positions in securities listed below. Stocktrades Ltd may also be compensated via affiliate links in the post below.

While the renewable industry has been under pressure lately, there is no denying that the future is bright for those who are leading the way in renewable energy.

One of the Canadian stocks to keep an eye on after its recent pullback is Greenlane Renewables (TSX:GRN). Earlier this week, the company announced a $9.8M landfill Gas-to-RNG contract. Before we get into the details about this particular deal, let’s take a quick look at exactly what Greenlane does.

Greenlane Renewables (TSE:GRN) is a global RNG company

greenlane renewables stock

The company is a global provider of biogas upgrading systems as it seeks to...

“create clean, low-carbon renewable natural gas (RNG), suitable for injection into the natural gas grid and for direct use as vehicle fuel”.

While Greenlane is a small cap, the demand for its products has been rapidly increasing and as of the last update, it had installed more than 125 systems in 19 countries.

The company recently graduated from the TSX Venture to the TSX Index and is listed under the Clean Technology and Life Sciences industry.

Strong Q1 Results from Greenlane

In mid-May, the company posted strong Fiscal 2021 Q1 results in which it generated revenue of $12.2M – up 317% YoY and beating estimates which called for $10.55M in revenue. Furthermore, adjusted EBIDTA came in at $600K, far outpacing expectations for $280K.

It was the third consecutive quarter in which the company posted record revenue and the second consecutive quarter of positive EBITDA.

The company is in a strong financial position with no debt and $37M in cash thanks in large part to a recent bought deal offering.

Impressively, the company’s sales backlog as of end of March stood at $37.7M and it had a sales pipeline valued at $715M.

As investors can see, there is plenty of demand for RNG solutions and the company has a large addressable market.

Analysts are expecting the company to grow revenue by 106% in Fiscal 2021, followed by approximately 50% annual growth in fiscal 2022 and 2023.

For a company like Greenlane, it will be all about execution. Can the company achieve these lofty expectations? Analysts only recently began covering the company in a meaningful way, but in both 2019 and 2020 Greenlane posted slight misses on revenue.

Nothing to be overly concerned about, but worth monitoring nonetheless. There is no reason to expect the company to not reach triple-digit growth in 2021, unless something materially changes in the next few quarters.

Contract Wins a huge step forward for Greenlane Renewable

Circling back to the $9.8M landfill-to-gas contract, these big wins are exactly what the company needs to deliver. The company will supply equipment for an RNG project in the U.S. Midwest which will...

“utilize Greenlane’s pressure swing adsorption (“PSA”) biogas upgrading system”.

The U.S. Midwest is proving to be a hotspot for RNG projects, and the Biden Administration’s commitment to renewable energy will certainly support strong demand.

Winning these big projects and proving their technology will only lead to more contract wins for Greenlane Renewables. Of note, the company also announced an additional $6.2M worth of contract wins this quarter which were not included in the $37.7M backlog as of March 31, 2021.

Overall, Greenlane is certainly one to watch. As a small cap it will likely be highly volatile, but it has the potential and the runway to become a global leader in the RNG industry. Another place that many eyes are moving towards is the online gaming sector. Pollard Banknote (TSE:PBL) is soaring, but is it overdone?

Do we think the company is a buy right now? We cover the stock extensively on our Discord and Q&A here at Stocktrades Premium. If you aren't a Stocktrades Premium member yet, consider joining us today!

Dylan Callaghan

About the author

Dylan is the co-founder of Stocktrades.ca and an avid self-directed investor. He holds a portfolio of Canadian growth and dividend growth stocks, and believes that anyone, regardless of financial status, stands to benefit from investing in the stock market. His ultimate goal with his writing and the continual development of Stocktrades.ca is to create a resource that helps Canadians, and investors from around the world, make more money and retire earlier.