by Ian Harvey
August 28, 2019
Aphria Inc (NYSE: APHA)
Aphria stock has proved to be among one of the best stocks to buy this earnings season. Canada's third largest marijuana cultivator, Aphria shocked Wall Street by posting a huge sales boost during its fiscal fourth quarter. Also, it is the only profitable company among cannabis companies of comparable size, and that is definitely a factor when evaluating the Aphria stock.
Aphria also issued guidance for fiscal 2020 – along with posting a profit — was both rarities among cannabis companies. Aphria became the first major Canadian cannabis company to report a net profit.
"It's a new day at Aphria," Interim CEO Irwin Simon said in a statement.
He added later: "Over the last six months, our organization identified immediate priorities to help generate substantial progress near-term and long-term. We built upon existing business fundamentals and capabilities, streamlined processes, strengthened governance, and focused on building brand awareness."
The surprise earnings sent APHA stock up an impressive 41%. There has been some profit-taking since, but APHA stock still has bounced nicely from pre-earnings levels.
And there could be more gains coming. The momentum of Aphria stock is likely to continue despite plenty of volatility and recent pullbacks. True, since the report Aphria stock has lost some of its value. But it’s still well above its levels from before the earnings announcement.
YOU NEED TO BE IN TO PROFIT!
Aphria Stock Undervalued…..
Despite the fact that Aphria stock is ranked at number 3 in terms of production capabilities, Aphria comes in only at number 5 when it comes to market capitalization. Analysts believe that such a gap in production capacity and market cap could be an indication that the company is currently undervalued by the market.
Aphria has forayed into the international markets and has managed to get a license to cultivate cannabis in Germany, the most lucrative market in Europe. It acquired German medical cannabis and pharmaceutical distributor CC Pharma earlier this year.
That acquisition underscores Aphria's strength in international medical cannabis markets. The company was one of only three cannabis producers to win the right to cultivate cannabis in Germany for the country's medical cannabis market. It's also active in nine other countries that have legalized medical cannabis.
However, the company’s biggest opportunity lies in Canada, and that is where Aphria needs to flourish quickly. It has already signed supply deals with all the provinces in Canada and in addition to that, it has also inked a partnership with Southern Glazer, the wine and spirits distribution giant. The latter will help it immensely in the company’s quest to distribute its products across Canada.
Aphria should enjoy a boost in sales soon with the Canadian cannabis derivatives market launching in October. The company could especially see growth in vape sales thanks to its partnership with leading U.S. vaporizer company Pax Labs.
The Vape Market…..
On its fourth-quarter conference call, Aphria indicated that it expects vapes and concentrates to represent about 30% of the Canadian adult-use market by 2021. In June, Aphria collaborated with PAX Labs, a maker of cannabis vaporization devices. Under the deal, Aphria will offer premium cannabis extracts from Solei, RIFF, and its namesake Aphria brand in pods for the PAX Era device and platform.
If new management can deliver on their guidance and keep re-inspiring confidence, Aphria stock could be one of the best stocks to buy in the cannabis space. Aphria is already profitable. The company should be a top candidate for major players outside the cannabis industry to partner with. Also, there is a favorable opinion of Aphria's chairman and interim CEO and look for him to help select a strong new CEO to run the company over the long run.
What can you do?
In the previous article “Aphria Earnings Scores Big!” I recommended that you…..
…..consider this options trade…..
Buy the APHA JAN 17 2020 10.000 CALL at approximately $0.40.
GREED CAN BE THE UNDOING OF A GOOD PROFIT!
However, Aphria stock has suffered volatility due to
trade tensions and the news relating to the First
vaping-related death, among other things; where the value of the above options trade
is sitting at $0.16.
Maybe this is a good time to double-down, or you may prefer considering the following…..
Buy the APHA JAN 17 2020 7.500
CALL at approximately $0.40.
PATIENCE PAYS OFF!
If you not a member and interested in being part of this profitable action just CLICK HERE.
AS ALWAYS THE DECISION IS YOURS!
An Important Note: That any suggestions for options trade considerations require investors/traders to use their own discretion as to when to enter or exit! As well, it is advisable to do further research and due diligence before executing your trade.
It is sometimes best to exit a trade, if there is already sufficient profit accrued, before an earnings report is presented. GREED can be the undoing of a nice profit!