The cannabis sector has definitely suffered a lot over the past few months, and that has weighed down many of the leading stocks in the industry. Canadian cannabis producer Aphria Inc (TSX:APHA) (NYSE:APHA) could not escape the downturn either, but it seems Aphria stock could eventually reward those who stuck with it.
Major Drivers
Issues related to supply overstock and panic due to vaping-related deaths weighed on Aphria stock quite heavily. That being said, there are many other aspects of the company that points to the fact that in the long-term, it could emerge as one of the leading lights of the industry.
One of the most important things to keep in mind with regards to Aphria is the fact that it is among the top cannabis producers in the industry. However, the higher production levels have also hurt the company over the past months since the industry has been suffering from an oversupply problem.
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Despite that, Aphria stock has not suffered as much as many other cannabis producers. APHA stock is currently trading at 26.9 times its future earnings, and that is comparatively cheaper than many of the best-known stocks in the industry. The company is surely bracing itself for generating future growth.
The company got a massive boost recently when its Aphria Diamond facility was granted cultivation licenses by Health Canada. The new facility will take the company’s production capabilities to 255,000 kilos a year at full tilt, which reflects an almost 100% rise in capacity. Experts believe that the facility will eventually help Aphria become the third-biggest cannabis producer in Canada and give it a highly impressive 12% share of the market.
At this point in time, higher production capabilities might seem unnecessary, but it is certain to benefit the company in the long run. Aphria stock is down 30% so far in 2019.
Featured image: Canva
