Aphria Inc (OTCMKTS:APHQF) has got its spark back, after shedding more than 50% in market value as the overall cannabis industry came under pressure in the first half of the year. Recent price action activity points to a stock that is ready to rally as investors look to take advantage of a steep dip in value.
Aphria Price Action
High turnover in traded shares all but continues to affirm talk that a bear run that had engulfed the stock has ended. The stock has already broken out of a tight trading range as it looks to find its way back to this year’s highs.
The emerging bull trend has helped push the stock above the $10 a share mark, which was a crucial resistance level. The stock now looks set to continue powering high to the $13 a share mark, seen as the next substantial resistance level.
Above the $13 a share mark, the stock should be on its way back to 52-week highs of $18 a share. On the downside, Aphria faces immediate support at the $10 a share mark, below which it could drop to the $8 a share level seen as the next support level.
However, if recent price action activity is anything to go by, then Aphria looks set to continue powering high as investors take note of the solid fundamentals fuelling the upward momentum.
Aphria is a global medical cannabis company that produces and sells cannabis in Canada and abroad. Headquartered in Ontario Canada, the company continues to set the standards for low cost, safe and pure pharmaceutical grade cannabis production. The company sales its products through an online store in addition to engaging in the wholesale shipping of cannabis plant cuttings.
Stellar Financial Results
A recent bounce back after a ferocious sell-off comes on investors taking note of what is at stake with Aphria growth prospects. The company has shown it has what it takes to take advantage of opportunities at stake, with the expansion of the cannabis marketplace.
The company’s earnings report for the fourth quarter ending May 31, 2018, all but painted a clear picture of how Aphria has moved to capitalize on emerging market opportunities. Aphria recorded an eleventh consecutive quarter of positive EBITDA that came in at $2.2 million and $8.4 million for the year.
Revenue came in at $12 million representing an 81% year-over-year increase as gross margin surged to 78.7%. During the quarter, the company successfully expanded its operations beyond Canada the U.S and Australia with expansion in Europe and Latin America.
Buoyed by the fourth quarter financial results Chief Executive Officer, Vic Neufeld, says focus now shifts towards putting the house in order, in anticipation of the recreational market coming online in October.
“We are excited and ready to hit the ground running on the first day of legal adult-use. It won’t be without its challenges, but we have a plan and the team in place to get it done. We continue to sign supply agreements with provinces and territories, and our Southern Glazer’s sales network partnership is unmatched,” said Mr. Neufled.
In anticipation of the adult use cannabis market opportunity, Aphria has signed a letter of intent for the formation of a joint venture with Data Communications Management Corp. The two are planning to collaborate on the development of new products brands as well as product categories to spur Canadian adult-use cannabis market evolution.
Aphria’s best in class industry leading expertise in strategic branding is to power the joint venture as the two seek to bring to market, product innovations and brands for catering to various needs.
In addition, Aphria has entered into a supply agreement with Ontario Cannabis Store that will see it supply high quality branded cannabis products for sale in the adult use market once it comes online. The company is to supply 59 SKUs of cannabis in the first year of the agreement.
“The agreement with OCS is an important piece of the puzzle as we get closer to legalization in Canada. Aphria is not only ready for October 17, but we’re also getting ready for the long-term evolution of the industry,” said Mr. Neufeld.
A bounce back from this year’s lows underscores how investors are once again falling in love with Aphria stock. The company has made significant strides as it seeks to capture sizeable market share in the recreational marijuana market starting October.
The signing of a supply agreement for recreational cannabis market in seven provinces underscores how focused the company is about accelerating revenue growth. With the future looking bright for Aphria now may be the best time for early birds to get involved in a stock that is without a doubt headed to the moon after bottoming out.
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Disclosure: We have no position in APHQF and have not been compensated for this article.