After a massive sell-off in mid-April, Aphria stock lost nearly half its value. It has not recovered since. At current prices, $6.30 USD on the NYSE, Aphria Inc (TSX:APHA) (NYSE:APHA) has lost almost 40% in the last three months. Where to next for APHA stock?
Aphria Stock: Sell?
According to NYSENewsRoom, the current analyst consensus is to "Sell." No investor wants to hear that. But perhaps that pertains to a short-term bearish trend and not the long-term potentials.
Because there are strong fundamentals in Aphria's operations that may help investors decide to hold; key incentives that boost the stock's long-term potential.
They include:
- Distribution deals with all 10 Provinces in Canada.
- Strong international expansion.
- A potential market leader in Germany.
The last point is not to be ignored. And it may be the very market that saves Aphria stock down-the-line.
International Expansion and Germany
The company has set up operations globally in Latin America, South Africa, and Europe—with a major emphasis placed on Germany. It's a smart move. Germany is likely going to be the largest cannabis market outside of North America.
Aphria is one of three companies that holds a German cannabis license, and this puts it in a leadership position. The other two are Aurora Cannabis (TSX:ACB) (NYSE:ACB) and ICC International Cannabis (CSE:WRLD.U) (OTCPK:WLDCF).
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As one of only three, Aphria Inc should find itself in an advantageous position; as the market in Europe grows, it will have a first-mover advantage compared to its peers. And there's an icing on this cake: Aphria's acquisition of CC Pharma, a distributor that already serves over 13,000 pharmacies across Germany.
Medical Cannabis and Europe
In the last year, six European countries announced new cannabis legislation, and over €500 million has been invested in European cannabis businesses. Now, HealthEurope estimates that the cannabis market here will be worth up to €123 billion by 2028.
For this reason, among others, not all analysts are quick to "Sell" on Aphria stock. ETFDailyNews feels that "Aphria is not only undervalued compared to some of its competitors but [...] you are getting a lot of bang for your buck if you are betting on international expansion."
The Takeaway
Europe and Germany, in particular, might turn things around for Aphria stock. Keep a close watch on these shares over the next few weeks, especially as derivatives legalization kicks-off in Canada—another market that Aphria Inc is prepared for.
What are your thoughts on this?
Featured Image: Canva
