Aphria: Strong Buy and Hold Potential for 2020
Markets in the United States and across the globe have been significantly impacted by the selloffs that came as a result of the coronavirus. Although, cannabis stocks have experienced a slight bump in the last couple of weeks as they have been determined by consumers and governments alike to be “essential businesses”.
We believe Aphria will survive and thrive during the coming months of coronavirus fallout. They’ve got a strong cash position, international market presence, and diverse product offerings to allow for success in the long term.
For starters, Aphria has a great track record of revenue, with incredible year-over-year increases and quarter-over-quarter increases, which allowed them to generate a sizeable profit. But let’s take a closer look:
Aphria is a ridiculously cheap multinational marijuana company that has the cannabis industry’s most attractive valuation and strongest outlook of any of its peers. Aphria’s shares lost a little over 20% during the first two months of 2020 but should provide an incredible buying opportunity for patient investors. Aphria’s strong international presence has allowed for its revenues to explode and some of its recent acquisitions such as its newly acquired subsidiary, CC Pharma, in Germany, have been a total gamechanger for the company. Aphria has managed to outperform its peers. Its international coverage, cash balance sheet, and new cannabis edible portfolio are all enticing enough. But why exactly does it have strong buy-and-hold potential for 2020?
In the following table, you’ll see the marijuana stocks with the highest year over year (YOY) sales growth for the most recent quarter. Increasing sales indicate that a company’s business is growing. This is often used to measure the recent growth of young companies which have not yet reached profitability – like most marijuana companies in the industry today.
| FASTEST GROWING MARIJUANA STOCKS | |||
|---|---|---|---|
| Price ($) | Market Cap ($M) | Revenue Growth (%) | |
| Aphria Inc. (APHA.TO) | CA$3.03 | CA$809.4 | 456.6 |
| Green Thumb Industries Inc. (GTII) | CA$5.65 | CA$1,159 | 300.0 |
| Innovative Industrial Properties Inc. (IIPR) | 56.89 | 969.2 | 269.5 |
Source: YCharts
- International Cannabis Market Coverage: As mentioned previously, the cannabis stock market coverage that Aphria has internationally, specifically in Germany has been tremendous for the company. The company’s new subsidiary CC Pharma generated an incredible amount of revenue for Aphria, nearly 72% of its total net revenues for Q2 2020. CC Pharma has been a huge point of revenue generation for the company since it acquired CC Pharma in early 2019.
- Aphria’s Cash Balance Sheet: Aphria’s sizeable cash balance sheet, one of the most robust in the cannabis industry, that will help it endure any hardship it may experience during the coronavirus. The cash balance sheet tops out at just over $600 million. Aphria went through a period of non-essential asset liquidation and raised $460 million in convertible debentures. The company has the remainder of its cash balance sheet through $80 million in term debt and $160 million in equity.
- Edible Cannabis Products: The company recently debuted a cannabis edible product portfolio that was timed along with the legalization of cannabis edible products in Canada. Aphria was on the line with the wave of cannabis edible legalization as Canada’s edible legalization, nicknamed “Cannabis 2.0”, was effective on December 14th of 2019. Cannabis edibles sold by the company, those within its “Aphria Diamond” product line, were rated as one of the best edible products by consumers. Aphria Diamond edible products, specifically Good Supply and Riff, have the tetrahydrocannabinol (THC) and cost-per-gram with it to compete and dominate the Cannabis 2.0 market.
Here are some marijuana stocks with the lowest 12-month trailing price-to-sales (P/S) ratios according to YCharts.com. This provides an idea of how much business is generated for every dollar invested – especially important for younger marijuana companies like Aphria.
Source: YCharts
We hope this quick dive into the fundamentals of Aphria helps you make informed investment decisions during this time of great uncertainty. Tell us why you’re taking a position in Aphria. Happy investing.
Curious about other top marijuana stocks to buy for 2020?
Innovative Industrial Properties (IIPR)
Charlotte’s Web Holdings (CWBHF)
Green Thumb Industries (GTBIF)
Aphria: Strong Buy and Hold Potential for 2020
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