MGC Pharmaceuticals Ltd shares rocket on game-changing deal

The MGC Pharmaceuticals Ltd (ASX:MXC) share price has rocketed higher after announcing a game-changing deal…

| More on:
a woman

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

One of the biggest movers on the market on Friday has been the MGC Pharmaceuticals Ltd (ASX: MXC) share price.

At one stage the medical and cosmetics cannabis company's shares were up as much as 82%. At the time of writing its shares have given back some early gains and are 53% higher at 5.8 cents.

Why have its shares rocketed higher?

This morning MGC Pharmaceuticals announced that it has signed a binding terms and conditions supply agreement with South Korea-based Varm Cosmo.

The agreement will see MGC's Derma division supply five of its cannabidiol cosmetic products in white-label form to be sold to consumers as part of Varm Cosmo's cosmetics range.

According to the release, the agreement includes a minimum agreed purchase quantity of 15,000kg per month, which is expected to generate approximately $40 million in annual revenue for the MGC Derma division.

MGC Derma is a 51:49 joint venture with cosmetic manufacturer Dr. M. Burstein Ltd.

The two parties are expected to sign a binding sale agreement in the coming 31 days and will look into expanding the product range and supply volumes accordingly.

Should you invest?

Considering the South Korean beauty market is estimated to be worth US$13 billion per annum and facial skincare products are believed to account for 51% of the market, MGC could certainly be in a strong position to profit if these cosmetic products are well received by consumers.

But at this stage it is impossible to know how the products will fare in the market.

Whilst I'm optimistic that this is the start of something very special, I would suggest investors keep MGC on their watchlist for now alongside other promising pot stocks such as Auscann Group Holdings Ltd (ASX: AC8), Cann Group Ltd (ASX: CAN), and Creso Pharma Ltd (ASX: CPH).

Wondering where you should invest $1,000 right now?

When investing expert Scott Phillips has a stock tip, it can pay to listen. After all, the flagship Motley Fool Share Advisor newsletter he has run for over ten years has provided thousands of paying members with stock picks that have doubled, tripled or even more.*

Scott just revealed what he believes could be the 'five best ASX stocks' for investors to buy right now. We believe these stocks are trading at attractive prices and Scott thinks they could be great buys right now...

See The 5 Stocks *Returns as of 9 January 2025

Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

More on Investing

A white and black robot in the form of a human being stands in front of a green graphic holding a laptop and discussing robotics and automation ASX shares
Technology Shares

Joining the revolution: How I'd invest in ASX AI shares right now

Advances in artificial intelligence (AI) could usher in a new industrial revolution. Here’s how you can invest in it.

Read more »

Close up of baby looking puzzled
Retail Shares

What has happened to the Baby Bunting (ASX:BBN) share price this year?

It's been a volatile year so far for the Aussie nursery retailer. We take a closer look

Read more »

woman holds sign saying 'we need change' at climate change protest
ETFs

3 ASX ETFs that invest in companies fighting climate change

If you want to shift some of your investments into more ethical companies, exchange-traded funds can offer a good option

Read more »

a jewellery store attendant stands at a cabinet displaying opulent necklaces and earrings featuring diamonds and precious stones.
Investing

The Michael Hill (ASX: MHJ) share price poised for growth

Investors will be keeping an eye on the Michael Hill International Limited (ASX: MHJ) share price today. The keen interest…

Read more »

ASX shares buy unstoppable asx share price represented by man in superman cape pointing skyward
Investing

The Atomos (ASX:AMS) share price is up 15% in a week

The Atomos (ASX: AMS) share price has surged 15% this week. Let's look at what's ahead as the company build…

Read more »

Two people in suits arm wrestle on a black and white chess board.
Retail Shares

How does the Temple & Webster (ASX:TPW) share price stack up against Nick Scali (ASX:NCK)?

How does the Temple & Webster (ASX: TPW) share price stack up against rival furniture retailer Nick Scali Limited (ASX:…

Read more »

A medical researcher works on a bichip, indicating share price movement in ASX tech companies
Healthcare Shares

The Aroa (ASX:ARX) share price has surged 60% since its IPO

The Aroa (ASX:ARX) share price has surged 60% since the Polynovo (ASX: PNV) competitor listed on the ASX in July.…

Read more »

asx investor daydreaming about US shares
How to Invest

How to buy US shares from Australia right now

If you have been wondering how to buy US shares from Australia to gain exposure from the highly topical market,…

Read more »