Cadiz Inc: An Under-the-Radar Growth Play with MASSIVE Upside Potential

An up-and-coming water infrastructure stock is turning heads around the market. Cadiz [CDZI] has performed well in 2024, and it has massive growth potential that, if fulfilled, could make this stock an incredible value at its current price. In this report, I’ll provide an overview of the company, its growth prospects, why technical & fundamental analysis indicate it could be on the verge of breaking through a crucial resistance point, and why it could be on course to hit $10 per share within the coming months.

Overview

Cadiz is one of the largest water infrastructure providers in the Southwestern US, one of the most water-starved regions in the U.S. The company was founded in the early 1980s after a hydrologist discovered a large aquifer under the Mojave Desert just outside of Cadiz, CA. After the discovery, the company quickly went to work acquiring permits and approvals to begin capturing groundwater for use in local agriculture.

Fast forward a few years to 1998, and the company began a review & permitting process to use the Cadiz aquifer as a groundwater storage bank that would store surplus water from the Colorado River. The effort would eventually become known as the Cadiz Water Project. 

With a water source secured, Cadiz Inc. then began to focus its efforts on potential delivery routes. In 2008, the company acquired a 99-year lease of land along the California-Arizone Railroad to construct a 43.mile water pipeline connecting the water project to the Colorado River Aqueduct, but they weren’t done yet.

A few years later, in 2011, the company turned heads when it purchased the first stretch of a 220-mile pipeline that stretches from Cadiz to Bakersfield, CA, a city of over 400,000 residents1. Cadiz Inc completed its purchase of the entire pipeline in 2020, and it’s currently in the process of converting the pipeline to transport water instead of fossil fuels. According to the company’s website2, this is the first known project converting a fossil fuel pipeline to water.

Cadiz also provides water purification services through its ATEC Water Systems unit, and it even cultivates certain crops at its main campus.  

The company’s ultimate goal is to provide access to clean, reliable, and affordable water for local populations, including local federally-accepted Native American Tribes, through the operation of the Cadiz Water Project and the Mojave Groundwater Bank.

Fundamentals 

At the time of writing, Cadiz Inc. is currently trading with a market cap of just $243.6 million, according to data from Fidelity. However, the market seems to be undervaluing the potential value that will be added when it begins pushing water down through its pipelines. 

Although still under way, the company is approaching the final stages of bringing its pipelines on line. When water starts flowing, it could see its market cap explode to over $1 billion in short order, which would represent a tremendous upside for early movers if it materializes.         

Cadiz is a bit of a unique pubco so identifying a suitable competitor for an apples-to-apples comparison is difficult. However, it shares many operational similarities with companies operating in the oil and gas sectors. 

Typically, oil and gas exploration companies are valued based on various factors, such as asset quality, reserve potential, and stage of development. Production sites under development usually reach their full valuation potential at the production or near-production phase, when the resources in question are fully de-risked, proven, and production-ready. At this crucial point, market valuations typically shift their focus from being determined based on future earnings potential rather than speculative or resource-based metrics. 

Currently, Cadiz is quickly approaching the near-production phase, and it has been pursuing its goals aggressively in recent months with several notable acquisitions and fundraising developments. Even so, the company’s current asset portfolio could already justify a $1 billion valuation, yet its market cap remains well below the milestone. There appears to be a disconnect between the market’s current valuation and the company’s long-term growth prospects. Once the pipelines go live, this gap could close very quickly, and early movers could see significant upside on their positions as a result of the realignment.

Recent  Developments 

Cadiz to Buy Keystone XL Pipeline Assets for Groundwater Bank

Just a few days ago, a press release revealed that Cadiz had agreed to purchase 180 of steel pipe from the now defunct Northstream Pipeline. Originally approved to pass through the US-Canada border, the Biden Administration pulled the project’s permit, effectively ending the effort. The pipeline was criticized for its environmental impact and its potentially adverse effects on native tribes along its route. 


Cadiz will use the steel pipe to advance completion of its groundwater banking project in the Mojave Desert. In the company press release, David Sickey, former Senior Advisor to the U.S. Department of Energy and former Chairman Coushatta Tribe of Louisiana said,  "Converting the Keystone from an oil pipeline to a water pipeline serving disenfranchised communities is the ultimate definition of environmental justice." 

Cadiz Launches $23 Million Common Stock Offering

In early November, Cadiz launched a registered direct offering at $3.34 per share. Its largest shareholder, Heerema International Group Services, participated in the offering and maintained its roughly 34% stake in the company. According to a press release announcing the effort, the net proceeds will go towards advancing the development of its water supply and groundwater banking project. 

This funding round demonstrated that the company’s largest shareholder still believes in the company, as it was willing to invest additional funds in order to maintain its stake. It also shows that Cadiz is pushing hard to bring its pipeline on line. 

Cadiz Enters Into LOI With Non-Profit Investment Fund Dedicated To Financing Sustainable Infrastructure Projects

At the end of October, Cadiz announced it had entered into a letter of intent with a non-profit investment fund dedicated to financing sustainable infrastructure projects. According to a press release announcing the news, the undisclosed fund has agreed to invest up to $150 million in the water resource developer.

Technical Analysis

A deeper dive into CDZI’s technicals reveal even more noteworthy growth potential.

As of November 15th’s closing bell, CDZI is up 18.5% YTD in 2024, but it has maintained a somewhat narrow trading range since its late May rebound rally. Share prices have encountered stiff resistance at the $3.80 mark this year, but the stock began to build bullish momentum following the Oct. 31st press release announcing the company’s securing of a LOI for a $150 million. On November 1st, the news was greeted by the market with a 15% rally that was accompanied by a massive uptick in volume. Days later, on November 11th, the stock had its biggest day for trading volume since July of 2023.

Last time the stock saw an influx of volume at this scale, prices smashed through the $3.80 resistance point. Ultimately, the stock couldn’t sustain this price point, and prices closed as low as $2.15 per share before regaining their positive trend.

Although the stock has encountered some pushback from the bears since its early November rally, its positive trend line remains intact. If it continues along this tract, it could hit $5.80 per share within less than four months. The recent volume spike could provide the momentum the stock needs to break through resistance at $3.80 and achieve the $5.80 target. If you bought in at the most recent close of $3.32 per share, you could record a gain of roughly 75% on this potential move.  

From there, the upside could be even more dramatic, as in-depth analysis and forecasting shows share prices could quickly eclipse $10 per share. The last time share prices passed $5.80 per share was in 2016, when the company’s outlook was much, much more uncertain. However, market conditions were generally positive that year, and the stock underwent a parabolic run-up over the next few months.

Share prices went on to achieve a high of $16 a piece by May of 2017. CDZI eventually saw its gains evaporate in late 2021 through early 2022, when concerns about rising rates and inflation potential soured investor sentiment on more speculative stocks. 


If we extrapolate this data to today’s conditions, we can quickly see that this stock could achieve significant growth if it can sustain its momentum. Given the recent volume spike and the company’s improving fundamental outlook, it has a much greater chance of sustaining a breakout past $5.80 that has the potential to carry share prices up to $10.18 in a matter of months. If this scenario comes to fruition, shareholders would see a gain of 206% from the stock’s most recent closing price of $3.22. 


It’s also worth noting that this company has seen an influx of short positions in recent weeks, setting the stage for a potential short squeeze that could throw even more weight behind a breakout rally. As of October 31st, sources report that CDZI has a short interest of 13.3%. That is significantly higher than the S&P 500 average of 2.32%4, and a rally past $3.80 per share has the potential to spark a scramble among short sellers seeking to cover their positions.

The Bottom Line 

Cadiz has the potential to be a no-brainer at its current valuation, given its current asset portfolio and future growth prospects. In addition to its growth case, the company will have an immeasurably positive impact on the customers it serves, including underprivileged Native American communities. From a fundamental perspective, Cadiz’s valuation could skyrocket to $1 billion plus the moment it starts pumping water down its pipelines, so the company seems significantly undervalued at its current market cap of  $243.6 million. Furthermore, extensive technical analysis paints a promising picture with the most optimistic price target indicating a gain of more than 200% from its latest close, or a “triple-up” in share prices. 

Water supplies continue to be an issue in the southwest5, and Cadiz is uniquely positioned to address several underserved markets. Demand for this critical resource is very insulated to economics, so share prices could also enjoy significant recession resistance properties. With  the company aggressively working towards becoming, any disconnect between its current valuation and its fully-realized growth potential could close rapidly once operational pipelines are within reach. 

However, if you wait until the water starts flowing, you could miss out on a substantial amount of upside. Given the obvious value of Cadiz’s asset portfolio, it could be an excellent value at its current price point, and it could drop a triple-digit gain in your lap within a few months if it can fully realize its potential.

B Riley Sets Price Target For Cadiz Inc (NASDAQ: CDZI) at $15 Share Price Resulting in a Market Cap Growth of +393.42% to $1.02 Billion Market Cap from current $210m Market Cap.

Disclaimer

Micro Caps Daily is a project of West Coast Media LLC and intended solely for entertainment and informational purposes. This website/media webpage is owned, operated, and edited by West Coast Media LLC. Any wording found on this website/media webpage or disclaimer referencing “I” or “we” or “our” or “West Coast Media” refers to West Coast Media LLC. This website/media webpage is a paid advertisement, not a recommendation nor an offer to buy or sell securities. By reading our website/media webpage, you agree to the terms of this disclaimer, which are subject to change at any time. We are not registered or licensed in any jurisdiction whatsoever to provide investment or brokerage advice or anything of an advisory or consultancy nature and therefore are unqualified to give investment recommendations. Always do your own research and consult with a licensed investment professional before investing. This communication is never to be used as the basis for making investment decisions and is for entertainment and educational purposes only. At most, this communication should serve as a starting point to do your own research and consult with a licensed professional regarding the companies profiled and discussed. Companies with low price per share are speculative and carry a high degree of risk, so only invest what you can afford to lose. Consult your financial, investment, and tax advisors to determine what financial and tax strategies may be right for you. Investor protection and other important information is available at https://www.sec.gov/.

By using our service, you agree not to hold our site, its editors, owners, or staff liable for any damages, financial or otherwise, that may occur due to any action you may take based on the information contained within or referred to from our website/media webpage. We do not advise any reader to take any specific action. Losses can be larger than expected if the company experiences any problems with liquidity or wide spreads. Never invest purely based on our alerts. Gains mentioned on our website/media webpage may be based on end-of-day or intraday data.

This publication and its owners and affiliates may hold positions in the securities mentioned in our alerts, which we may sell at any time without notice to our subscribers, which may have a negative impact on share prices. If we own any shares, we will list the information relevant to the stock and the number of shares here. That information is only valid at the time it is published, and we do not undertake to update it.

West Coast Media’s business model is to receive financial compensation to promote public companies and to conduct investor relations advertising, marketing, and publicly disseminate information, not limited to our websites, email, SMS, push notifications, influencers, social media postings, ticker tags, press releases, online interviews, podcasts, videos, audio ads, banner ads, native ads, and responsive ads. This compensation is a major conflict of interest in our ability to be unbiased regarding the subject of our reports and communications. Therefore, this communication should be viewed as a commercial advertisement only. We have not investigated the background of the parties who hired us or of the profiled companies. Any non-compensated alerts are purely for the purpose of expanding our database for the benefit of our future financially compensated investor relations efforts.

The third parties paying for our services, the profiled company, or their affiliates likely wish to liquidate shares of the profiled company at or near the time you receive this communication, which has the potential to impact share prices, possibly significantly. Frequently, companies profiled in our alerts experience a large increase in volume and share price during the course of investor relations marketing, which may end as soon as the investor relations marketing ceases.

We do not guarantee the timeliness, accuracy, or completeness of the information on our website/media webpage. The information on our website/media webpage is believed to be accurate and correct but has not been independently verified and is not guaranteed to be correct. The information is collected from public sources, such as the profiled company’s website and press releases, but is not researched or verified in any way whatsoever to ensure the publicly available information is correct. Furthermore, West Coast Media often employs independent contractor writers who may make errors when researching information and preparing these communications regarding profiled companies. Independent writers’ works are double-checked and verified before publication, but it is possible for errors or omissions to take place during editing of independent contractor writer’s communications regarding the profiled company(s). You should assume all information in all of our communications is incorrect until you personally verify the information and are again encouraged to never invest based on the information contained in our written communications. Our emails may contain forward-looking statements, which are not guaranteed to materialize due to a variety of factors.

Compensation: Pursuant to an agreement Between West Coast Media LLC and Vimho LLC. West Coast Media LLC has been hired by Vimho for a period beginning on 2024-11-14 and ending 2024-11-29 to publicly disseminate information about NASDAQ: CDZI via digital communications. We have been paid five thousand dollars USD.