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Aphria Inc (TSE:APH)(OTCMKTS:APHQF) A Discount Entry Opportunity

Aphria Inc (TSE:APH)(OTCMKTS:APHQF) A Discount Entry Opportunity
Written by
Richard Sandle
Published on
May 8, 2017
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When we last reviewed Aphria Inc (TSE:APH)(OTCMKTS:APHQF) on April 4, 2017, the company’s stock was well on its way to making a new high on a major uptrend that started in early April of 2016 when the stock price was trading at $.96. The stock has since been on an unrelenting upsurge with strong volume making new high after new high for the past year, hitting an all-time high of $6.60 on April 11,2017. The stock is currently trading at $4.51, and for the first time in the past year, has dipped below the very discernible uptrend line that the chart has formed over the past year. This price break is a real opportunity for those looking to either add to their exposure or get in for the first time on Canada's Green Rush.

Before we get into details, a little background on the company for those not familiar with the company. Aphria Inc is one of Canada’s lowest cost producers that produces, supplies and sells medical cannabis. Located in Leamington, Ontario, the greenhouse capital of Canada, Aphria is truly powered by sunlight, allowing for the most natural growing conditions available. The company is committed to providing pharma-grade medical cannabis, superior patient care while balancing patient economics and returns to shareholders. Aphria Inc was the first public licensed producer to report positive cash flow from operations and the first to report positive earnings in consecutive quarters.On April 13, 2017, Aphria Inc reported its third quarter results, for the three and nine months ended February 28, 2017. The company can now boast a fifth consecutive quarter of profitability. Revenue for the last quarter reported showed a slight decrease, but steadily increased for the four prior quarters. The company also has a strong balance sheet with very little debt.In other news, Aphria Inc, along with Tetra Bio-Pharma Inc, announced on Apr 19, 2017, their plans for the joint distribution of dried medical cannabis in the maritime provinces and Quebec. Both companies will enter into a joint supply agreement. Under its ACMPR license, Aphria will supply the dried medical cannabis. Under its CDSA dealer's licence, Tetra will complete the formulation and packaging of the product at its New Brunswick facility, using the manufacturing process developed for its in-progress clinical drug trial for PPP001, a prescription drug using dried cannabis. The venture is scheduled to commence commercial operations early summer 2017, with revenue expected to be realized in Tetra's third quarter of 2017, and Aphria's first quarter of 2018. Based on the outcome of the initial venture, Tetra and Aphria may expand into other provinces.

"The commercial venture between Tetra and Aphria will enhance Aphria's brand visibility and distribution of our high-quality medical grade cannabis into the maritime provinces and Quebec, as we look to meet the commercial demand for PPP001," said Vic Neufeld, CEO of Aphria Inc. "As a leading Canadian licensed producer, it was important for us to work with an organization that shares our focus on pharmaceutical-grade quality assurance and control. Tetra's emphasis on developing products driven by patient needs and scientific research and development makes them the perfect partner in this important next step for Aphria."

Both Tetra and Aphria have invested in the development of its PPP001 drug and will continue to invest to bring PPP001 to market in both Canada and USA as the first prescription drug using dried cannabis. The venture will also be commercializing devices for the inhalation of medical cannabis.On April 20, 2017, Aphria Inc announced that it secured a $100 million raise, including a $75 million bought deal equity financing and $25 million in debt financing through a five-year term loan. The Company expects that 50% of the net proceeds of the Offering will be allocated towards the currently unfunded portion of the Part IV expansion of its production facilities. The balance will be allocated between the working capital necessary to support the company once the Part IV expansion is complete, and other strategic investments.Aphria Inc is showing its current market capitalization as $563.48 million, on 124.94 million shares outstanding as of May, 5, 2017. Currently, the company exhibits favorable financials, technicals, and favorable expectations for the cannabis industry. The price dip that the stock is currently experiencing looks to be a good buying opportunity. We will be updating our subscribers as soon as we know more. For the latest updates on APH/APHQF, sign up below!Disclosure: We have no position in APH/APHQF and have not been compensated for this article.

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