Why You Should be Watching Aphria Inc (OTCMKTS:APHQF)

Why You Should be Watching Aphria Inc (OTCMKTS:APHQF)


Weakness continues to play out in the cannabis patch, as we see several major Canadian cannabis leadership plays probing support levels, such as Aphria Inc (OTCMKTS:APHQF) testing its very important $7.50/share level. If that level breaks, the next level down to watch would be at $6.25/share. Auguring in favor of a hold of support here, the company just announced that it has signed a Manufacturer’s Representative agreement with We Grow BC Ltd., a Vancouver-based licensed producer of premium cannabis, to become We Grow’s exclusive sales representative across Canada.

According to its most recent release, “The Agreement adds a second brand of premium B.C.-bud to be sold alongside Aphria’s expanding portfolio of adult-use brands, which includes celebrated B.C.-bud from Broken Coast Cannabis, through the Company’s coast-to-coast sales distribution network.”

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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While the general trend in place over the past 6 weeks has been to the downside, the stock has leveled off over the past week, declining just 2% (which is actually tantamount to no real movement at all for a stock like this).

Given the growth rate on the topline (triple digits on a Q y/y basis), and the upcoming sector-wide catalyst, this is definitely a stock that should be on the radar on any subsequent drain-out of key support.

“Aphria has an unmatched ability to offer a cross-Canada sales and distribution network for adult-use cannabis,” said Jakob Ripshtein, Chief Commercial Officer at Aphria. “We are pleased to complement our existing, and soon-to-be unveiled, in-house adult-use brands with an expanding portfolio of partner brands like We Grow. With our well-established relationships and an extensive network of distribution facilities and resources, we are confident that all our brands, and those of our partners, will be proudly represented in stores and online throughout the country.”

Now commanding a market cap of $1.8B, 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%. This is an exciting story, and we look forward to a follow-up chapter as events transpire. 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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