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Tuesday, December 1, 2020

Is Aphria Inc (OTCMKTS:APHQF) Taking the Lead on Geographic Diversification?

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If you’re looking for a pullback opportunity in the Canadian cannabis patch that could have some explosive potential, then take a look at Aphria Inc (OTCMKTS:APHQF). The stock just kicked back down to test the 200-day and 50-day simple moving averages right in this $8.75/$9.00/share area. To help fuel a potential push back to break out above the key $10/share area, we have seen these guys make what appears to be a pretty important move.

To wit: the company just announced that it has entered into a series of agreements resulting in Aphria forming a joint venture, CannInvest Africa Ltd., with South African company Verve Group of Companies. According to the release, “as part of this transaction, CannInvest will acquire an interest in Verve Dynamics Inc., a licensed producer of medical cannabis extracts in Lesotho.  The Transaction is valued at C$4.05 million.”

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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Recent action has seen 18% tacked on to share pricing for the listing in the past month. In addition, the listing has witnessed a pop in interest, as transaction volume levels have recently pushed 19% beyond what we have been seeing over the larger time frame.

“We are very excited to bring this deal, which was inherited through our acquisition of Nuuvera, to a very successful close,” said Vic Neufeld, CEO of Aphria. “Given the abundant natural resources and our collective expertise and that of our partners, Verve is poised to become one of the lowest-cost producers of medical cannabis extracts in the world. This represents another significant pillar in our strategic international expansion, where our presence extends to more than 10 countries across five continents.”

“Our partnership with Aphria is a game-changer for the cannabis industry,” said Richard Davies, Managing Director of VGC. “We are very excited to be working with Aphria, who are undoubtedly the most agile and forward-thinking company in the cannabis space period. Together we aim to effectively network with multiple opportunities across the African continent with a keen focus on jobs creation, and most importantly community participation.”

Earning a current market cap value of $1.4B, APHQF has a significant war chest ($119.4M) of cash on the books, which must be weighed relative to about $8.6M in total current liabilities. One should also note that debt has been growing over recent quarters. APHQF is pulling in trailing 12-month revenues of $30.6M. In addition, the company is seeing major top-line growth, with y/y quarterly revenues growing at 100.6%. As more color becomes clear on the name, we will review the situation and update our take. 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.

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