Aphria Stumbles

Hilary Kramer

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

Sometimes cannabis investors do silly things. For example, this week the big cultivators gave back about 3% of last week’s Kamala Harris-inspired rally, and the catalyst has nothing to do with the plant they produce.

Aphria Corp. (NASDAQ:APHA) triggered the retreat with an 18% post-earnings loss. While some of that selling was deserved, actual cannabis sales remain both brisk and profitable.

Unlike some of its counterparts, APHA saw net revenue on that side of the company swell 18% from the previous quarter, and that business is already big enough to make money. It costs $1.41 to produce each gram of cannabis, which the company can then sell for $4 to $7, depending on the sales channel.

The COVID-19 pandemic did not interfere with that core cannabis calculation. Ironically enough, the problem came from APHA’s more conventional pharmacy distribution subsidiary, where the virus has pushed all other medical concerns to the sidelines.

That’s what APHA’s management classifies as “distribution” revenue. And since it accounts for half of the company’s top line, that weakness spawned an overall miss.

It happens. Management already sees conditions improving. But because cannabis investors are so jumpy, the stock cratered.

I’ve said it before, and I’ll say it again. APHA is my favorite of the big cultivators. Pricing on medicinal marijuana is improving where more recreationally oriented rivals like Aurora Cannabis Inc. (NYSE:ACB) are struggling to achieve any kind of price power at all.

APHA will be a winner when the weak hands finally fold, and the cannabis wars are over. You’ll just need to hang on a little longer for that scenario to play out.

Exclusive  CANNABIS CORNER: A Well-Balanced Pot Portfolio

Like This Article?
Now Get Mark's FREE Special Report:
3 Dividend Plays with Sky-High Returns

This newly-released report by a top-20 living economist details three investments that are your best bets for income and appreciation for the rest of the year and beyond.

Get Access to the Report, 100% FREE


img
previous article

As a difficult and deeply disrupted year enters the home stretch, Wall Street needs to stop dwelling on the recent past and obsessing over looming uncertainties. It is time to focus on the future. More than ever, that means clearing a little space in every portfolio for the newest and most dynamic stocks on the market. The trillion-dollar giants that dominate Silicon Valley and the S&P 500 alike have been huge, but now they’re prisoners of their own success. That’s why I’m going

PREMIUM SERVICES FOR INVESTORS

Dr. Mark Skousen

Named one of the "Top 20 Living Economists," Dr. Skousen is a professional economist, investment expert, university professor, and author of more than 25 books.

Product Details

LEARN MORE HERE

Bryan Perry

A former Wall Street financial advisor with three decades' experience, Bryan Perry focuses his efforts on high-yield income investing and quick-hitting options plays.

Product Details

LEARN MORE HERE

Jim Woods

Jim Woods has over 20 years of experience in the markets from working as a stockbroker,
financial journalist, and money manager. As well as a book author and regular contributor to
numerous investment websites, Jim is the editor of:

Product Details

LEARN MORE HERE

Bob Carlson

Bob Carlson provides independent, objective research covering all the financial issues of retirement and retirement planning. In addition, Bob serves as Chairman of the Board of Trustees of the Fairfax County (VA) Employees’ Retirement System, which has over $2.8 billion in assets.

Product Details

LEARN MORE HERE

Hilary Kramer

Hilary Kramer is an investment analyst and portfolio manager with 30 years of experience on Wall Street. Since 2010, Hilary's financial publications have provided stock analysis and investment advice to her subscribers:

Product Details

LEARN MORE HERE

Jon Johnson

Jon Johnson's philosophy in investing and trading is to take what the market gives you regardless if that is to the upside or downside. For the past 21 years, Jon has helped thousands of clients gain success in the financial markets through his newsletters and education services:

Product Details

LEARN MORE HERE

DividendInvestor.com

Used by financial advisors and individual investors all over the world, DividendInvestor.com is the premier provider and one-stop shop for dividend information and research.

Product Details

Popular tools include our proprietary Dividend Calendar, Dividend Calculator, Dividend Score Card, and many more.

LEARN MORE HERE