Aphria Stock Extends the Fall: What Should You Do Now?

Aphria stock

Over the course of the past year or so, Aphria stock has emerged as one of the stronger cannabis stocks in the industry, so there was a lot of interest in its fiscal second-quarter results in January. After having generated profits in the previous two quarters, Aphria Inc (TSX:APHA) (NYSE:APHA) sank into the red, with losses to the tune of C$7.9 million.

That being said, there were plenty of positive takeaways for investors. First and foremost, Aphria generated revenue in excess of C$120 million for the third straight quarter, and that proved to be a better performance than two of its bigger rivals.

Earnings Diversification

Aurora Cannabis (TSX:ACB) (NYSE:ACB), for example, has never hit those levels, and Canopy Growth (TSX:WEED) (NYSE:CGC) had not done so until its third quarter last year. Although Aphria has not been able to grow at a rapid clip in recent quarters, it has managed to keep things steady, and that is a notable achievement at a difficult time for the industry. Aphria has also managed to diversify its earnings channels.

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At the time of writing, Aphria stock is down by 2.70% at $4.66.

The company generated as much as C$86 million from distribution sales, much of which was generated by CC Pharma, its German subsidiary. CC Pharma distributes to 13,000 pharmacies in Europe, and in addition to that, Aphria has created a presence in 11 countries so far.

While the company does have supply agreements and is primed to enter the edibles market, sales growth is going to be crucial. The company has projected its sales growth to be marginal or flat in the third quarter, and that is something that is likely going to be on investors’ minds at this point. That being said, it should be noted that the Canadian cannabis industry has been going through a slow down for some months now.

The situation could rebound when more retail outlets are established, and if Aphria continues in the same vein, then Aphria stock could prove to be an attractive investment.

What do you think?

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