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Saturday, November 28, 2020

An Analysis of the Constructive Posture in Aphria Inc (OTCMKTS:APHQF)

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Shares of Aphria Inc (OTCMKTS:APHQF) continue to bunch up in a lateral consolidation that comes in the context of a very strong chart on a technical basis, with the stock breaking sharply above its 50-day and 200-day simple moving averages, which are now both underneath the share price and rising. To help undergird that constructive posture, the company just announced that it has closed the acquisition of LATAM Holdings Inc. from Scythian Biosciences.

According to the release, “The Transaction was funded by the assumption of US$1 million of existing LATAM Holdings debt with the remaining consideration funded by the issuance of 15,678,310 common shares of Aphria. The closing was pursuant to the terms of the definitive share purchase agreement previously announced by the Company on July 17, 2018.”

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, “Aphria is a leading global cannabis company driven by an unrelenting commitment to our people, product quality and innovation. Headquartered in Leamington, Ontario – the greenhouse capital of Canada – Aphria has been setting the standard for the low-cost production of safe, clean and pure pharmaceutical-grade cannabis at scale, grown in the most natural conditions possible. Focusing on untapped opportunities and backed by the latest technologies, Aphria is committed to bringing breakthrough innovation to the global cannabis market. The Company’s portfolio of brands is grounded in expertly-researched consumer insights designed to meet the needs of every consumer segment. Rooted in our founders’ multi-generational expertise in commercial agriculture, Aphria drives sustainable long-term shareholder value through a diversified approach to innovation, strategic partnerships and global expansion, with a presence in more than 10 countries across 5 continents.”

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As discussed above, APHQF just announced that it has closed the acquisition of LATAM Holdings Inc. from Scythian Biosciences. In all, traders will note 13% added to share values of the company over the past month of action.

Moreover, the listing has benefitted from a jump in recent trading volume to the tune of nearly 150% beyond its prior sustained average level

“Aphria continues to execute on its plans for strategic international expansion, including in Latin America and the Caribbean,” said Vic Neufeld, Chief Executive Officer of Aphria. “With a combined population of nearly 640 million, and with significant momentum from numerous countries introducing new or modernizing existing medical cannabis legislation, the region represents a significant opportunity for long-term growth. It also hosts some of the most favorable conditions for cultivating high-quality medical cannabis at substantial efficiencies – ideal for both regional supply and export opportunities. This acquisition firmly cements Aphria’s leadership in the region and on the global cannabis stage.”

Now commanding a market cap of $3.22B, APHQF has a significant war chest ($104.8M) of cash on the books, which must be weighed relative to about $43.9M in total current liabilities. APHQF is pulling in trailing 12-month revenues of $36.9M. In addition, the company is seeing major top-line growth, with y/y quarterly revenues growing at 110.3%. 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.

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