Are Shares of Aphria (APHA) Ready to Make a Big Move in 2020?

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January 2, 2020 11:50am ETF BASIC NEWS

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After a whirlwind 2019 for cannabis stocks, many investors are now eyeing Aphria (APHA) stock as the horse to bet on. The optimism surrounding this stock is based on solid company financials.

While Aphria was not immune to the bubble-like wave that lifted cannabis stocks high last spring only to abruptly drop them by the fall, APHA has at least been more profitable than its peers.

Aphria’s sales hit CA$36.9 million in fiscal 2018. By fiscal year 2019, company revenue reached CA$237 million. By the end of Q1 fiscal 2020, Aphria revenue topped CA$126.1 million, up 849% year-over-year – making this last quarter’s sales more than 50% of fiscal year 2019’s total.

APHA has also been reporting positive earnings. With two consecutive profitable quarters under its belt, the company has demonstrated positive bottom-line results in four out of five of its last quarters. While its net income of CA$16.4 million (7 cents per share) isn’t exactly raising eyebrows, it still seems to be outperforming its cannabis sector peers. 

Nonetheless, many investors are still waiting on Aphria to report positive free cash flow. On average, analysts are predicting sales of CA$437 million this year. At a market cap of roughly $1.25 billion, Aphria shares trade at less than three times this year’s average revenue estimate.

The company also touts CA$449 million of cash and equivalents on its balance sheet, giving Aphria enough cash liquidity to cover its current liabilities of CA$122.9 million.

So based on its liquid balance sheet, healthy revenue growth and notable profitability, Aphria seems to be gaining traction with investors.

Aphria’s focus on medical-grade THC sales seemed to be key to the company’s profitability in its most recent quarter. While many of its competitors in the cannabis space succumbed to overpromising and under-delivering on gains, APHA was not one of them.

Should the legal environment improve in 2020, APHA stock should be well-positioned to grow, with an availability of liquid cash and relatively little debt. 

What the charts say…

APHA stock is working to stay above its 50-day moving average, while the 100-day has been a challenge. Should Aphria rise above those levels and hit the $5.50 mark, the company may gain a foothold.

Many investors believe that it’s crucial for the stock to stay above $4.50, which was the low from almost a year ago. With the exception of the temporary breakdown in November, this realm seems to be where bulls draw the line. A drop below this level puts the $3.76 low back on the table.

Bullish investors will hope Aphria stays above $4.50, eventually reclaiming the 100-day moving average and going back up to $5.50.

Based in Leamington, Ontario, Aphria Inc. is known for low-cost production of high-quality cannabis at scale, and strives for cultivation in the most natural conditions possible. The company works to achieve sustainable long-term shareholder value via technological innovation, strategic partnerships and global expansion.

Stay tuned for Aphria’s Q2 fiscal 2020 earnings report slated for release on January 14, 2020.


Aphria Inc. (APHA) was trading at $5.03 per share on Thursday morning, down $0.19 (-3.64%). Year-to-date, APHA has declined N/A%, versus a 21.59% rise in the benchmark S&P 500 index during the same period.


About the Author: Eric Bowler

eric-bowlerEric Bowler is an accomplished journalist providing in-depth insights for more than two decades. Over the past several years his focus has been on the marijuana industry, with a special interest in cannabis growth stocks. His daily coverage of the industry keeps him on top of the key trends with the goal of helping investors make well-informed decisions.


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