With a market cap of $1.7 billion, Aphria Inc (TSX:APHA) (NYSE:APHA) is one of the biggest cannabis companies out there. Aphria stock is currently swapping hands for $6.98 USD on the NYSE and is in the green, albeit slightly; up 1% at the time of writing.
However, after the company’s earnings release on April 15th, shares took a beating and lost nearly 35% of their value. For the weeks since, shares moved predominantly sideways, only showing brief spikes that were quickly corrected.
Most recently, Aphria stock jumped roughly 6% for no obvious reason. The Marketrealist suggests one catalyst, however:
“The company’s valuations are at an all-time low compared to its peers, which might have attracted value buyers to the stock.”
To see if Aphria represents a buy-in opportunity now will depend on many factors. But there is potential ahead, although the year gone has not been plain sailing.
For example, so far in 2019, Aphria returned 19% to investors. In any other industry that would be considered a major success. But in the marijuana game, it’s just “okay” in comparison to some of its peers. Though smaller than Aphria, OrganiGram Holdings (TSXV:OGI) (NASDAQ:OGI), for example, has returned an impressive 71% YTD. A similar story lies with HEXO Corp (TSX:HEXO) (NYSE:HEXO) and Cronos Group (TSX:CRON) (NASDAQ:CRON), which have returned 50% and 55% respectively.
Faltering earnings results in April came at a bad time for the company that was still dealing with a massive fallout from head office controversies (read more about that here). But while some of that sentiment still overhangs on Aphria stock, there is potential moving forward.
Aphria Inc is touted to be the third largest cannabis producer in terms of annualized production capacity. The company is expecting 225,000 kilos per year. For its size, placing third is admirable.
Additionally, it is one of only four marijuana companies to have secured supply agreements with all 10 provinces in Canada. Further, it has a distribution agreement with Southern Glazer’s, the biggest spirits and wine distributing company in North America.
Such agreements give Aphria an advantage for the upcoming legalization of cannabis derivatives. The company will be afforded easy distribution channels for its derivative products and the latter agreement with Southern Glazer’s is especially appealing for the highly-lucrative cannabis beverage market.
What are your thoughts on Aphria stock?
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