As time goes on, many of us cannabis investors grow curious as to what will be the next catalyst that will drive the market higher. It feels as if we have been stuck in a downtrend now for an eternity, and despite some recent achievements, the sector has not been able to hold on to any form of substantial recovery. Aphria’s recent quarterly report was overshadowed by Tilray and Canopy’s earnings reports. These reports only added to the already dull outlook on the sector, as both companies lost money and were more focused on long term growth and investment as opposed to results and profitability.
Now despite the harsh market conditions, as patient long-term investors, we need to deploy a strategy that should win in the long run. During these long bear markets, we need to determine which stocks will emerge from the depths as industry leaders and should push forward to set new records in terms of share price, and on paper. The cannabis sector forged many new investors who were drawn to the thought of quick money, but now that times have changed, this recent pullback will put a lot of investors patience to the test.
So why do we like Aphria so much now, and what sets it apart from its competitors? Aphria jumped up from the middle of our watchlist to land in the top three stock to watch for this coming fall after their earnings report. We can’t get over how pleased we are that Aphria is bringing in so much revenue from overseas, Germany to be specific. This provides diversity in their revenue stream, not to mention the fact that we see much less competition in Germany itself. Aphria holds one of only three licenses in the country, which is not only a valuable asset in itself, but it provides access to a huge growing market. A company that is putting all its eggs in one basket betting on success within the Canadian market alone is a high-risk pick in our opinion, and that’s why we really like the diversity Aphria has to offer.
Now looking at Aphria’s share price, immediately after earnings was not a time that we were comfortable buying, although we were very pleased with their earnings. When a stock runs 40%, it’s nice to see if you already own it, but usually, there will be profit taking. Luckily for anyone watching from the sidelines who was regretting not buying Aphria, another wave of brutal earnings from Tilray and Canopy dragged the sector down once again. Was Aphria caught in overall negative market sentiment, we think so. Since running to $9.50 Aphria has once again pulled back below $9 (CAD) and we feel that now could be a fantastic time to own thing company. Take a look at Aphria today as this could be one of the last times we see this stock in the single digits.
APHA shares were trading at $6.21 per share on Tuesday morning, down $0.03 (-0.48%). Year-to-date, APHA has gained 9.14%, versus a 17.91% rise in the benchmark S&P 500 index during the same period.
About the Author: Aaron Missere
Aaron is an experienced investor who is also the CEO of Departures Capital. His primary focus is on the cannabis industry. He also hosts a weekly show on YouTube about marijuana stocks. Learn more about Aaron’s background, along with links to his most recent articles. More...