The ‘Boring’ Alternative

Hilary Kramer

Hilary Kramer is an investment analyst and portfolio manager with 30 years of experience on Wall Street.

While the S&P 500 has recovered all but 1.8% of its 2020 losses, most of the Big Cannabis group remains deeply depressed. There just isn’t a lot of love for these stocks in a pandemic-spawned recession.

Aurora Cannabis Inc. (NYSE:ACB) and Tilray Inc. (NASDAQ:TLRY) are down roughly 60% year to date (YTD), with Aurora, in particular, suffering fresh double-digit-percentage losses this week.

Even group leader Canopy Growth Corp. (NYSE:CGC) is back in the bear market zone for the year. But, it’s worth noting that Aphria Inc. (NASDAQ:APHA) was a $5 stock back in January. It’s still a $5 stock now.

In the cannabis boom, people made fun of Aphria for focusing on the “boring” medicinal market. Prescriptions for really sick people simply weren’t as exciting a business as watching the recreational map turn green.

But with millions of people still sheltering in place, it no longer seems to matter what state regulators decide about non-prescription cannabis sales. Recreational consumption has stalled.

Prescriptions are still getting filled. Aphria is making money. It might be boring, but cash flow is what investing is all about.

We’re looking for Aphria’s revenue to double in this pandemic year. That’s big. And with the company within sight of breaking even whenever management decides to adjust the budget, there’s little danger of its stock melting down like its peers.

If you’re following cannabis for the thrills, there are better ways to throw your money away than buying some of these stocks. But if you want to put money to work, Aphria has been the best game in town.

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