Aphria Inc (OTCMKTS:APHQF) shares have shown a heaping helping of outperformance and relative strength over the past two days, relative to the broad market and to the cannabis patch. The reason? Another clear example of potential big-cap strategic investment coming into the space, with Aphria as the target and candidate.
The suitor, according to the Globe and Mail, is Altria (MO), the giant tobacco name and maker of Marlboro cigarettes. Naturally, all companies involved came out and denied the story. But the market still believes it. And why not? It makes a ton of sense, as we will discuss below.
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 noted above, APHQF shares have gotten a boost in recent days due to rumors – and highly plausible ones – that Altria is sniffing around at a possible major strategic investment in Aphria. According to the piece from the Globe and Mail, executives from the companies have been spotted meeting together on several occasions over the past week, and multiple sources have leaked the possible deal in the works.
In all, the chart shows 19% during the past week in terms of shareholder gains in the stock. Furthermore, the stock has witnessed a pop in interest, as transaction volume levels have recently pushed 81% above its longer-run average levels. The jump in shares on the news and rumors takes it well back above its 50-day simple moving average.
The technical posture remains strong, and the plausible and credible nature of these rumors will likely make it extremely difficult for shorts to win in the near-term.
Currently trading at a market capitalization of $3.77B, APHQF has a significant war chest ($104.8M) of cash on the books, which is balanced by 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.