Aphria Inc (OTCMKTS:APHQF) has been weathering a difficult correction over the past 3 ½ months, with shares now sitting almost perfectly at the key 61.8% Fibonacci correction off of the stock’s all-time highs right around $20 per share back in early January. There are a number of potential key catalysts and themes that can drive the action here, but expansion is the real name of the game in the dog eat dog world of the Canadian cannabis patch.
To that end, the company just announced that it has finalized the previously announced supply agreement with the Société des alcools du Québec. According to the release, “the three-year agreement for up to 12,000 kg annually guarantees a supply of high-quality, safe and clean cannabis products for sale in the Quebec adult-use market, through the Société québécoise du cannabis’ (SQDC) retail outlets and e-commerce platform.”
Aphria Inc (OTCMKTS:APHQF) bills itself as a company that produces, supplies, and sells medical cannabis in Canada. Its cannabis products include dried flowers and cannabis oils. APHQF sells its products through its online store and telephone orders, as well as MMPR licensed producers.
The company offers sativa, indica, and hybrid medical marijuana products, as well as cannabis oils. It also provides support services in the form of medical consultations, group therapies, and rehabilitation to veteran and first responders.
The company sells its products through its online store or phones, as well as engages in the wholesale shipping of medical marijuana plant cuttings and dried buds to other licensed producers. Aphria Inc. is headquartered in Leamington, Canada.
According to press materials, “APHQF is one of Canada’s lowest cost producers, produces, supplies and sells medical cannabis. Located in Leamington, Ontario, the greenhouse capital of Canada. APHQF is truly powered by sunlight, allowing for the most natural growing conditions available. We are committed to providing pharma-grade medical cannabis, superior patient care while balancing patient economics and returns to shareholders. We are the first public licensed producer to report positive cash flow from operations and the first to report positive earnings in consecutive quarters.”
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As noted above, the stock has been battling for key support at a key technical level which corresponds with a critical Fibonacci level in the course of its retracement from its early 2018 highs. The company continues to pile of cash from operations as its core model continues to roll along smoothly. However, this is a battle for supremacy, and the only way that evaluation bears are going to be beaten is by signals that the company is on a path to expand its territory in the market share game. Its latest announcement is a step in the right direction.
“We are very pleased to finalize this agreement with the SAQ and look forward to supplying the Quebec adult-use market with a variety of high-quality, safe and pure cannabis products,” said Vic Neufeld, Chief Executive Officer of Aphria. “Our product and brand portfolio has been specifically developed to meet the needs of very distinct market segments, and we look forward to offer adult-use consumers in Quebec a unique choice.”
Recent action has seen 3% during the past week in terms of shareholder gains in the company, but that move comes in the context of a larger bearish trend. That said, APHQF has evidenced sudden upward volatility on many prior occasions. In addition, the name has benefitted from a jump in recent trading volume to the tune of 26% above its longer run average levels.
Currently trading at a market capitalization of $1.26B, APHQF has a significant war chest ($116.1M) of cash on the books, which must be weighed relative to about $1.6M in total current liabilities. APHQF is pulling in trailing 12-month revenues of $25.5M. In addition, the company is seeing major top-line growth, with y/y quarterly revenues growing at 62.7%. You can bet we will update this one again as new information comes into view. Sign-up for continuing coverage on shares of $APHQF stock, as well as other hot stock picks, get our free newsletter today and get our next breakout pick!
Disclosure: we hold no position in $APHQF, either long or short, and we have not been compensated for this article.