As we continue to watch the pullback in the cannabis patch play out, we want to pay special attention to a few top-tier players, such as Aphria Inc (OTCMKTS:APHQF), as we watch for signals to guide our analysis. At this point, we are looking at a 60% pullback off the early 2018 highs in a stock riding $120M in cash and triple-digit revenue growth. The $7.50/share level is the key line in the sand.
As far as recent catalysts, the company just provided an update related to its previously announced plan to divest of its equity investments in Liberty Health Sciences, Inc. According to the release, “Aphria is amending its put and call agreement, effective July 26, 2018, pertaining to its sale of shares in Liberty and intends to repurchase the shares, if and when, U.S. federal laws change, subject to certain conditions including the consent of the Toronto Stock Exchange.”
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 basically flat action over the past week of action following a 20% pullback over the past month. Furthermore, the name has seen interest climb, with an increase in recent trading volume of 14% beyond its prior sustained average level.
“The U.S. cannabis industry continues to gain momentum at the state and federal level, and in public opinion, and we are pleased to retain the optionality to extend our strategic partnership with Liberty in a way that satisfies our obligations as a member of the Toronto Stock Exchange,” said Vic Neufeld, Chief Executive Office of Aphria. “We will continue to provide our shareholders with access to the most promising cannabis opportunities around the world, including where permitted in the U.S.”
Currently trading at a market capitalization of $1.77M, APHQF has a significant war chest ($119.4M) of cash on the books, which stands against 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%. We will update the story again soon as further details emerge. 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.