Aphria stock is in the green on Friday after hovering around a year-low in recent weeks. Are investors starting to believe that Aphria Inc (TSX:APHA) (NYSE:APHA) could be the best pot stock bargain ahead of the 2.0 market?
Is the Decline in Aprhia Stock an Opportunity?
Aphria shares have more than halved in value since a February peak of $14.07, which is indicative of the broader struggles of the market as scandals, supply issues, and a lack of retail locations hamper growth for pot stocks across the board. While some of the industry’s heavyweights have been nearly decimated by internal struggles (see CannTrust (TSX:TRST) (NYSE:CTST) as the foremost example of this), Aphria Inc has actually kept itself relatively clean, and the decline in share value could actually represent a good opportunity for investors.
Aphria stands out from most other Canadian cannabis companies in one key area—profitability. While this has proved elusive for most producers, which have taken on a strategy of high capital expenditure and aggressive expansion, Aphria has actually posted profits in the last two quarters. Following its most recent quarterly results, Aphria stock hopped 17% after surprising investors with a net profit of $16.4 million CAD, or 7 cents per share.
Earlier this month, the company announced that it had received Health Canada approval on its flagship Aphria Diamond facility in Ontario. Once at full capacity, this facility will more than double Aphria’s production capabilities to 255,000 kilograms. This added capacity will be crucial to the company’s 2.0 plans, which is expected to come into effect by mid-December with most products hitting shelves by the new year. Aphria shares have gained marginally this week since the receipt of that approval.
Vape Crisis Concerns Weigh on Aphria Stock
One possible weight on Aphria stock and its 2.0 products is the escalating concerns of the safety of THC vapes, a crucial part of many cannabis companies’ next-generation portfolios. According to data released by the CDC last week, THC has been found to be a common denominator in several deaths linked to vaping. However, Aphria Inc spokesperson Tamara McGregor attempted to allay fears, saying most, if not all, of the documented pulmonary illnesses and deaths point to “products coming off the illicit market.”
Aphria stock is currently trading at $6.70 in Toronto. Does it look like a bargain to you?
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