|Bid||5.23 x 3200|
|Ask||5.27 x 36200|
|Day's Range||5.08 - 5.33|
|52 Week Range||3.76 - 10.95|
|Beta (5Y Monthly)||2.91|
|PE Ratio (TTM)||17.63|
|Forward Dividend & Yield||N/A (N/A)|
|1y Target Est||N/A|
You hear that? That's the sound of the beginning of a big rebound in marijuana stocks. Year-to-date, the ETFMG Alternative Harvest ETF (NYSEARCA:MJ) is already up almost 10% -- and we are less than three weeks into the year. That's a huge gain in a short amount of time.The big rebound in pot stocks can be attributed to favorable fundamental developments (multiple cannabis companies have reported strong fourth quarter numbers in early January), favorable legal developments (among other things, Illinois just legalized recreational marijuana), and a whole bunch of investors deciding that with the new year, comes new opportunity.That's the good news for cannabis bulls. The better news? This big rebound in marijuana stocks is just getting started.InvestorPlace - Stock Market News, Stock Advice & Trading TipsOver the next several quarters, everything is going to improve for the cannabis sector. Demand trends will re-accelerate thanks to new vapes and edibles products, as well as retail footprint expansion. Supply overhang issues will ease with rebounding demand. International markets will start to take off as governments around the world follow in Canada's footsteps. Revenue growth trends will improve. Margins will bounce back. Losses will narrow.All in all, things will just get better for the cannabis sector in 2020, and as they do, depressed and beaten-up pot stocks will rebound. * The Top 5 Dow Jones Stocks to Buy for 2020 With that in mind, let's take a deeper look at four marijuana stocks to buy for the big 2020 rebound. Canopy Growth (CGC)Source: Shutterstock The cannabis market's biggest and most important company, Canopy Growth (NYSE:CGC), has been leading the pot stock rebound in 2020 so far. Year-to-date, CGC stock is up more than 15%.Canopy will continue to be a leader in this rebound for the rest of 2020 for one very simple reason: this is the best cannabis company out there by a mile.They have the biggest balance sheet -- thanks to a multi-billion dollar investment from Constellation Brands (NYSE:STZ) -- with the most resources and firepower to invest in things like product development, international expansion, strategic acquisitions, and production build-out. They also have the biggest sales base, the most production capacity, and the widest global distribution network.The management team is arguably the best in the business, as Constellation has infused the company with experienced talent. They also have the most visible pathway to dominating the ultra-valuable U.S. market, thanks to a planned acquisition of U.S. cannabis company Acreage.All in all, Canopy Growth has significantly differentiated itself from the pack in the cannabis world. As the leader, if pot stocks keep rebounding throughout the rest of the year, CGC stock will lead that rebound. Cronos (CRON)Source: Shutterstock The only other "high quality" cannabis company that has won the multi-billion dollar support of a consumer staples giant is Cronos (NASDAQ:CRON). This unique feature should propel meaningful out-performance in CRON stock in 2020.Cannabis market trends will rebound in 2020 thanks to new products, retail footprint expansion, favorable legislative progress, and international growth, among other things. As those trends rebound, investors will rush back into the marijuana industry like its early 2019 all over again.When investors flocked into the space back then, they did most of that flocking into two names -- Canopy and Cronos -- because those were the smartest and safest investments given their fortified balance sheets, huge investment capability, and tremendous financial support. Of note, Cronos stock outperformed Canopy stock in the first three months of 2019 by a tally of 80% to 60%, mostly thanks to the fact that CRON stock was cheaper than CGC stock (15-times one-year forward sales for CRON, versus 30-times for CGC at the beginning of 2019). * 10 Cheap Stocks to Buy Under $10 In 2020, the same dynamic will repeat. Investors will rush back into the space amid improving fundamentals and trends. They will specifically rush back into the smartest and safest investments in the space, CRON and CGC. And CRON will be the bigger winner, because CRON stock (9-times one-year forward sales) remains way cheaper than CGC stock (14-times one-year forward sales). Aphria (APHA)Although most pot stocks are up big in early 2020, shares of cannabis producer Aphria (NYSE:APHA) are not, mostly because the company reported second quarter numbers in January that missed across the board. Revenues missed estimates, as did profits. And management dramatically cut its full-year guide.Consequently, APHA stock is actually down 1% in 2020, while many of its marijuana peers are up 10% or more.This weakness won't last. It's a gross overreaction to a few headline second quarter misses. Underneath those misses, the numbers were actually pretty good. Revenue growth accelerated sequentially, from up 8% quarter-over-quarter in Q1 to up 9% quarter-over-quarter in Q2. Volume growth also accelerated, and by way more, going from 7% growth in Q2, to 18% growth in Q2. Gross margins reversed course, after dropping from 53% in Q4 to 50% in Q1, and shot back up to 57% in Q2. At the same, Aphria reported a huge sequential increase in adjusted EBITDA after a sequential drop in Q1.In other words, all of the company's important underlying trends improved meaningfully in the second quarter. Revenue, volume, margin, and profit trends all got better.And that's before the launch of new vapes and edibles products. As such, the numbers will only get better in the third and fourth quarters. As they keep improving, investors will push APHA stock way higher, especially considering its relatively depressed valuation base (2-times one-year forward sales). Aurora (ACB)Source: Shutterstock Last, but not least, on this list of marijuana stocks to buy for the big rebound in 2020 is Aurora (NYSE:ACB).Aurora has long been the second-biggest player in the Canadian cannabis market, coming in right behind Canopy in terms of sales, volume, and production capacity. But investors have increasingly expressed concerns over the company's balance sheet and liquidity, as Aurora features one of the worst balance sheets in the cannabis sector and has a major cash burn problem.Ultimately, these concerns have kept ACB stock depressed. These concerns could ease dramatically in 2020. Aurora will launch of suite of edibles and vapes products over the coming months. They should also be opening a ton of new stores.This combination will reignite demand trends at Aurora, and revenue growth rates should start improving. As they do, more favorable supply-demand dynamics will push up margins. Bigger revenues plus bigger margins equals smaller losses. Smaller losses mean less cash burn.As cash burn becomes less of a problem in 2020 (and as the company's improved revenue growth trajectory illuminates a more visible pathway towards profitability), investors will become less concerned about the company's balance sheet and liquidity. The more those concerns fade, the more ACB stock will rally.As of this writing, Luke Lango was long CGC. More From InvestorPlace * 2 Toxic Pot Stocks You Should Avoid * The Top 5 Dow Jones Stocks to Buy for 2020 * 7 Fintech ETFs to Buy Now for Fabulous Financial Exposure * 3 Tech Stocks to Play Ahead of Earnings The post 4 Marijuana Stocks to Buy for the Big 2020 Rebound appeared first on InvestorPlace.
Following a disastrous performance in 2019, marijuana stocks are staging a huge comeback in early 2020. So far this year, the ETFMG Alternative Harvest ETF (NYSEARCA:MJ) is already up about 10%, representing an impressive average gain per trading day of nearly 1%.Leading the charge are the usual suspects. So far this month, Canopy Growth (NYSE:CGC) is up 15%. Tilray (NASDAQ:TLRY) has gained 19%. and Cronos (NASDAQ:CRON) has added 6%.But one marijuana stock missing out on this party is Aphria (NYSE:APHA). Best known as the only cannabis company to report a quarterly profit so far, APHA has not rebounded with its peers in 2020. Instead, Aphria stock is flat in 2020.InvestorPlace - Stock Market News, Stock Advice & Trading TipsThis relative underperformance of APHA stock won't last.Aphria's trends are too favorable, its fundamentals too good, and its valuation too discounted to keep Aphria stock depressed for much longer. As marijuana stocks continue to rebound throughout 2020 amid favorable cannabis trends, Aphria stock will turn into the one of the segment's hottest stocks. Indeed, my estimates indicate that Aphria stock could more than double this year.Here's how that could happen. Marijuana Stocks Will Keep ReboundingCentral to the bull thesis on APHA stock is the idea that the entire cannabis sector will rebound dramatically in 2020.Three positive catalysts will drive that rebound. First, the currently depressed demand trends of Canada's legal cannabis market will improve significantly in 2020. The factors that will bring about its improvement are the introduction of new edibles and vape products, more aggressive launches of new stores, and logistical improvements by legal suppliers and distributors. The demand rebound will turn falling revenue growth rates across the whole industry into rising revenue growth rates. * The Top 5 Dow Jones Stocks to Buy for 2020 Second, the supply glut of Canada's legal market will ease due to accelerating demand trends. Economics 101 teaches that falling supply and rising demand lead to higher prices. Higher prices create higher margins. Consequently, the cannabis industry's margin weakness of 2019 could turn into margin strength in 2020.Third, various cannabis markets outside of Canada will gain traction and turn into meaningful revenue contributors for legal suppliers. That is, governments around the world will adopt more lenient marijuana laws, thanks to increasing pressure by consumers for such laws. As that happens, more countries will legalize cannabis in 2020. At the same time, more and more states across the U.S. will legalize marijuana, and more and more Canadian cannabis companies will jump into the U.S. market.The marijuana industry seems optimally positioned for a huge rebound in 2020, meaning that the recent strength of the sector's stocks will most likely persist. Aphria Stock Will Join The RallyAphria stock is currently sitting out the big rally by cannabis stocks. That won't last forever. Soon enough, Aphria will join the rally, and when it does, Aphria stock could explode higher.Investors have been relatively bearish on Aphria recently because the company's second-quarter earnings report, delivered in early January, missed analysts' average expectations, and the company, in conjunction with the results, cut its full-year revenue and profit guidance. But the miss doesn't tell the whole story.Aphria's trends are actually pretty good. Its quarter-over-quarter cannabis revenue growth and its QoQ cannabis volume growth accelerated compared with Q1's rates. Those two data points imply that demand for Aphria's cannabis is rising. At the same time, its cannabis gross margins improved tremendously, rising from 50% in Q1 to 57% in Q2. The data supports the idea that improving supply-demand dynamics are meaningfully lifting Aphria's margins.Aphria has all the momentum it needs to join the marijuana stock rally, as demand for its products is accelerating and its margins are expanding.Eventually, these improving growth trends, combined with the massively discounted valuation of APHA stock, will produce an epic rally by the shares.Analysts, on average, expect Aphria's fiscal 2022 earnings per share to be 40 cents. That estimate will prove to be conservative. My modeling indicates that improving demand and margin drivers will push the company's FY22 EPS to 50 cents or higher. Based on a forward earnings multiple of 20, which is average for growth stocks, my 2021 price target for Aphria stock is $10.The shares closed at $5.19 yesterday. The Bottom Line on APHA StockAphria stock has sat out the 2020 marijuana stock rally so far, but it won't remain on the sidelines forever. Instead, as soon as worries about the Q2 earnings report fade, the shares will start to climb higher. Given how cheap this stock is and how good APHA's fundamentals are, the rally will be huge and could reach 100%.As of this writing, Luke Lango was long CGC. More From InvestorPlace * 2 Toxic Pot Stocks You Should Avoid * The Top 5 Dow Jones Stocks to Buy for 2020 * 7 Fintech ETFs to Buy Now for Fabulous Financial Exposure * 3 Tech Stocks to Play Ahead of Earnings The post Here's How Aphria Stock Could Double in 2020 appeared first on InvestorPlace.
As the cannabis stocks trade at multi-year lows, the market is looking to grasp at any positive news from the upcoming earnings season. Any positive news from Q4 sales or insights on the Cannabis 2.0 rollout in Canada will breath some relief into the market.The North American cannabis industry has plenty of catalysts by midyear 2020, but the related companies were built for robust revenues and much larger markets. The keys to watch in the upcoming earnings reason are the ability of cannabis companies to generate profits from the current market opportunities and not the previous grand expectations.Several big catalysts for cannabis revenue growth in 2020 include CBD in the U.S., Cannabis 2.0 rollout in Canada, additional retail stores in Ontario and the approval of recreational cannabis in U.S. states such as Illinois. Not to mention, the U.S. always has the potential for the federal government to approve cannabis allowing for the ultimate prize for cannabis companies and investors alike.The market projections for the global cannabis market reaching $200 billion in the future should stand. For now, cannabis stocks in Canada and the U.S. have to focus on maintaining liquidity to survive and eventually thrive in the disappointing sales ramp in North America and around the globe. A lot of the Canadian issues should resolve themselves over the next few quarters, but the illicit market remains a formidable competitor and investors shouldn’t assume the profit picture improves dramatically in the near term with so much competition.We’ve delved into three cannabis companies that recently reported quarterly results through November 30 with commentary covering the early part of January. Using TipRanks' Stock Comparison tool, we lined up the three alongside each other to give us an idea of what the Street thinks is in store for the trio in the year ahead.Aphria (APHA)The most influential earnings report of early January was Aphria. The company is one of the larger Canadian cannabis LPs and provides a good indication of market demand into the first couple of weeks of January.The good news is Aphria grew net cannabis revenues by 9% sequentially for the quarter ending November 30. The bad news is that the cannabis company cut FY20 revenue guidance by an astounding $75 million.The revenue cut wasn’t a huge shock to the market considering the Ontario regulators pushed new retail store openings out until April and Aphria has a fiscal year ending in May. This timing issue combined with vape bans in Alberta and Quebec and the possibility of a major revenue ramp up this fiscal year was near impossible.For FQ2, the company reported revenue declined by C$5.5 million to C$120.6 million. The major revenue hit came from a reduction of distribution revenue in Germany.The stock dipped 8% on the news to $5 based on the revenue cut and the hit to EBITDA targets. Aphria now expects FY20 EBTIDA of only C$35 million to C$42 million, down from an estimate of over C$90 million.The company remains one of the rare Canadian companies generating positive EBITDA due to reasonable operating expenses, but the market needs to absorb this revenue cut before the stock can rally this year.All in all, Wall Street is split between the bulls and those who are more cautious on the cannabis player, with TipRanks analytics exhibiting APHA as a Moderate Buy. Out of 4 analysts tracked in the last 3 months, 2 are bullish on Aphria stock while 2 remain sidelined. With a return potential of 23%, the stock's consensus target price stands at $6.36. (See Aphria stock analysis at TipRanks)OrganiGram (OGI)OrganiGram had one of the better reports in the cannabis sector in the last few quarters. The stock has soared over 45% on the news, yet OrganiGram isn’t even back to the highs from November.For the quarter ending in November, the Canadian cannabis company reported net revenues of C$25.2 million. The amount beat estimates, but the company is still below the revenue levels from mid-2019 and the beat occurred due to low calorie wholesale revenues of C$9.5 million.The rally is more of a relief that the numbers didn’t get worse despite investor knowledge that monthly cannabis sales in Canada have slowly improved throughout the year. In addition, OrganiGram generated quarterly EBITDA of C$4.9 million for a 9% EBITDA margin.The company has a fully diluted market cap of $500 million with a FY21 sales target in the $170 million range. The stock trades at a reasonable 3x forward sales, but OrganiGram only has a minimal C$34 million cash balance and already has C$85 million in debt.The company forecasts having enough capital to fund operations and capital expenditure plans, but those plans include rolling out Cannabis 2.0 products in 2020 and further facilities. Investors should expect OrganiGram to take advantage of this stock rally to $3 to utilize the at-the-market equity program to raise the C$32 million available under the program after raising C$23 million subsequent to quarter end.Where does the Street side on this cannabis producer? It appears mostly bullish. Out of 10 analysts polled by TipRanks in the last 3 months, 6 are bullish on OrganiGram stock while 3 remain sidelined and one is bearish. With a return potential of nearly 43%, the stock’s consensus target price stands at $4.73. (See OrganiGram stock analysis at TipRanks)KushCo (KSHB)KushCo provided an alternative view to the cannabis sector as the company is focused on providing products and services to the U.S. cannabis market. The company took a revenue hit in the last quarter from the health concerns in the U.S. vape market.Quarterly revenues were up 38% from last year to $35 million, but the numbers were down from the $47 million reported in the prior quarter. KushCo missed analyst estimates by a wide margin as customers reduced vape inventory levels in fears of bans by state regulators.The company still guided to full year revenues of $240 million in expectations that customer orders catch up over the remaining three quarters of the year. KushCo laid off 53 people in order to improve the profitability picture after reporting a $12.5 million loss in the quarter, but the employee reduction only saves ~$4.3 million in annual savings.The stock has a minimal market valuation of $175 million, but the tough market and limited margins should leave investors on the sidelines here. KushCo continues to lose too much money and only ended the November quarter with a cash balance below $15 million.To find good ideas for cannabis stocks trading at fair value or better, visit TipRanks’ Best Stocks to Buy, a newly launched tool that unites all of TipRanks’ equity insights.
TORONTO , Jan. 16, 2020 /CNW/ - Aphria Inc. ("Aphria" or the "Company") (TSX: APHA and NYSE: APHA), a leading global cannabis company, is combating winter blues and energizing the public with the launch of a Plant Positivity Winter Garden on Monday, January 20 , known to some as Blue Monday — the most depressing day of the year based on factors such as weather conditions, debt levels and low motivation levels. With a vision to improve quality of life for communities and individuals, Aphria's social impact platform, Plant Positivity, provides people with greater access to green spaces and creates opportunities to learn about plants and plant care.
Organigram shares soared more than 35% Wednesday and helped lift the broader cannabis sector higher, after the company’s first-quarter revenue more than doubled and beat analyst estimates.
Canadian cannabis company Aphria Inc.'s shares rose 2.4% in premarket trade Wednesday, after CIBC upgraded the stock to neutral from underperform and said it is more constructive on the stock now that an inevitable cut to guidance has been announced. "There will be issues to contend with, such as ongoing elevated capex spend and substantial working capital investments," analysts John Zamparo and Krishna Ruthnum wrote in a note. "But the balance sheet is relatively strong and market share gains are encouraging." The analysts raised their price target on the stock to C$7.00 ($5.36) from C$6.50. The company's revised guidance--it now expects 2020 revenue of C$575 million to C$625 million versus earlier guidance of C$650 million to C$700 million--is "much more achievable" although it may not be conservative enough, the analysts wrote. But with consensus below the new range, future guidance risk has moderated, said the note. Aphria shares have fallen 25.5% in the last 12 months, while the ETFMG Alternative Harvest ETF has fallen 41%. The S&P 500 has gained 26%.
Aphria Inc.’s U.S.-listed shares slid 9% Tuesday before paring their losses, after the Canadian cannabis company posted weaker-than-expected revenue for its fiscal second quarter and revised down its guidance to reflect issues including a slower rollout of retail locations in Ontario.
Canadian cannabis producer Aphria on Tuesday reported a small Q2 loss while revenue surged 466%. Aphria fell sharply, but other marijuana stocks rallied.
At some point, Aurora Cannabis (NYSE:ACB) has to be a buy. Right? Perhaps eventually, it will be. But until Aurora stock shows signs that its downtrend is ending, why stick with a loser?Source: ElRoi / Shutterstock.com I couldn't have been more clear about how I feel about cannabis stocks at this point. While many of these companies have explosive opportunities over the next 12 to 48 months, many others lack the financial strength to survive over that time frame.As a result, investors need to blend the technicals and fundamentals -- hand-picking which ones are most likely to survive, then thrive. In the summer when support gave way, I waved a flag of caution. After the washout and subsequent bounce in November, I said to avoid Aurora stock as it struggled to rebound.InvestorPlace - Stock Market News, Stock Advice & Trading TipsI don't write that to showboat -- trust me, I've had more than enough servings of humble pie. Instead, I write it to drive home the same point: If you're going to speculate with cannabis stocks, don't do it with the losers. Avoid Aurora StockSource: Chart courtesy of StockCharts.comThe first problem with ACB stock? The chart. * 4 Energy Stocks to Power the New Year Aurora stock continues to make new low after new low. In mid-November, the stock plunged to new lows. ACB stock bottomed at $2.14 and within days, shares were up about 50% -- hitting a high of $3.25.However, the 20-day moving average remained stiff resistance, and Aurora stock was unable to reclaim prior range support near $3.50. That right there was the first sign that ACB stock was to be avoided.The next sign came when it failed to hold the $2.40 area, which quickly sent Aurora stock back down to new lows. Those lows now continue to break, leading to lower prices. I don't know when ACB stock will bottom, but until it puts in a low and reverses trend, I'm not interested in buying it.Then, there are the financials.Despite explosive revenue growth and -- quite frankly -- solid gross margins, Aurora Cannabis is losing tons of money. Trailing revenue of 293.5 million CAD has produced a gross profit of 205.5 million CAD. Solid right? It is, but a trailing net loss of 383.5 million CAD is a red flag.Total cash went from about 316 million CAD at the end of June to 191.9 million CAD at the end of September. Current liabilities weigh in at about 464.6 million CAD, while current assets of 588.3 million CAD.Will ACB face a liquidity issue? I'm not sure. I just know that it lacks the same financial firepower as some of its peers, while the charts remain detrimental to the bull case. If Not Aurora Stock, Then Who?I like several other names more than ACB stock, including Canopy Growth (NYSE:CGC) and Aphria (NYSE:APHA). Canopy's thesis and chart can be viewed here, while Aphria's is available here.While neither stock is robust at the moment, they are making much better strides that Aurora stock.First, both have broken over downtrend resistance. In Canopy's case, the stock is maintaining over the 20-day and 50-day moving averages as well. For Aphria, the stock is just over these key moving averages, and remaining above them would be a victory for the bulls. Second, these stocks are not only avoiding new lows, they are holding key support marks.If that changes, it's an opportunity for speculators to consider stopping out and limiting the damage. With Aurora stock, we don't have key support holding up -- so we don't have a way to measure risk.Now, look at the balance sheet difference (all figures in CAD).Current Assets Current Liabilities Ratio (Current) Total Assets Total Liabilities CGC 3.6B 425.8M 8.4 8.2B 2.6B APHA 780.8M 138.5M 6.0 2.4B 708.4M ACB 588.3M 464.6M 1.3 5.6B 1.1B Are these companies perfect? Not by any means. Canopy has a strong balance sheet, but negative free cash flow. Aphria has a smaller balance and is not yet generating positive free cash flow, but has turned a profit in seven of the last nine quarters.These are not slam dunks, but APHA and CGC have better setups than Aurora stock. That said, they are still speculative stocks.Bret Kenwell is the manager and author of Future Blue Chips and is on Twitter @BretKenwell. As of this writing, Bret Kenwell is long APHA. More From InvestorPlace * 2 Toxic Pot Stocks You Should Avoid * 10 Mid-Cap ETFs to Buy for Next Decade * 8 Quirky ETFs for Not-So-Quirky Profits * 4 Energy Stocks to Power the New Year The post Avoid Aurora Stock, Buy Canopy Growth Stock for Cannabis Exposure appeared first on InvestorPlace.
The Canadian pot producer blames a change in Germany’s reimbursement for medical marijuana, but says demand is strong. Shares are down 8%.
(Bloomberg) -- A dividend-paying pot stock may sound like a contradiction but for the first time it’s being raised as a possibility.Aphria Inc. would like to return money to shareholders, Chief Financial Officer Carl Merton told analysts on the company’s earnings call Tuesday.The Canadian cannabis producer has posted three consecutive quarters of positive adjusted Ebitda, a rarity in the industry, and aims to continue that trend “to both internally finance future growth initiatives and, in the future, being in the position to provide an annual return to our shareholders through dividends,” Merton said.It’s a bold statement in an emerging industry that’s seen its benchmark ETFs plunge more than 60% since March amid disappointing earnings results, which have included large Ebitda losses from most companies. While Aphria stands out for its profitability, the numbers are tiny with second-quarter adjusted Ebitda coming in at C$1.9 million.Shares fell as much as 11% in early trading after the company missed second-quarter revenue estimates and cut its full-year forecast. At the end of the quarter, it had nearly C$500 million of cash and cash equivalents.To contact the reporter on this story: Kristine Owram in New York at firstname.lastname@example.orgTo contact the editors responsible for this story: Brad Olesen at email@example.com, Jennifer Bissell-LinskFor more articles like this, please visit us at bloomberg.com©2020 Bloomberg L.P.
Benzinga Pro's Stocks To Watch For Tuesday JP Morgan (JPM) - Shares were up 1% following better-than-expected Q4 results. The bank reported quarterly EPS of $2.57 on sales of $28.3 billion. Analysts had ...
(Bloomberg) -- Aphria Inc. shares fell 8% in pre-market trading after the Canadian cannabis producer missed the lowest revenue estimate and cut its guidance for the current fiscal year.The company reported second-quarter net revenue of C$121 million, below the consensus estimate of C$130 million. Its adjusted Ebitda was C$1.9 million, the third consecutive quarter of positive results.Aphria cut its full-year revenue forecast to a range of C$575 million to C$625 million, down from its prior outlook of C$650 million to C$700 million. It now expects to report full-year adjusted Ebitda of C$35 million to C$42 million, down from C$88 million to C$95 million previously.The pot producer cited a slower-than-expected rollout of retail stores in its home province of Ontario, the temporary banning of vape products in Alberta, the higher cost of sourcing third-party cannabis while it waited to receive a license for its Aphria Diamond greenhouse and a slowdown at its German operations due to changes in the government’s medical reimbursement model.Chief Executive Officer Irwin Simon said he expects sales and profitability to accelerate in the second half of fiscal 2020. Speaking on the company’s earnings call, he also said Aphria is considering non-core asset sales “to further streamline our business and reduce capex over time.”Cannabis stocks were broadly lower Tuesday morning after rallying on Monday. Cronos Group Inc. fell 3.2%, Canopy Growth Corp. lost 2.4% and Aurora Cannabis Inc. slid 2.3%.(Updates with CEO comment in fifth paragraph)To contact the reporter on this story: Kristine Owram in New York at firstname.lastname@example.orgTo contact the editors responsible for this story: Brad Olesen at email@example.com, Steven FrommFor more articles like this, please visit us at bloomberg.com©2020 Bloomberg L.P.
Aphria Inc. (APHA) delivered earnings and revenue surprises of 0.00% and -9.42%, respectively, for the quarter ended November 2019. Do the numbers hold clues to what lies ahead for the stock?
Aphria fired the first shot of cannabis earnings in 2020 -- and it missed. Guiding the full-year range lower by C$75 million after only missing by C$10 million this quarter doesn't paint a pretty picture for the year, but investors need to remember the bulk of Aphria's revenue is actually led by CC Pharma in Germany. Despite the net loss of C$7.9 million, Aphria did turn in a positive C$1.9 million adjusted EBITDA.
Shares of Aphria Inc. slumped 4.8% in premarket trading, reversing an earlier gain of as much as 7.3%, after the Canada-based cannabis company reported fiscal second-quarter losses that were in line with expectations and revenue that missed expectations, but provided an upbeat full-year sales outlook. For the quarter to Nov. 30, Aphria swung to a net loss of C$8.2 million ($6.3 million), or 3 cents a share, from a profit of C$54.8 million, or 22 cents a share, in the same period a year ago. The FactSet consensus was for a per-share loss of 3 cents. Net revenue rose more than 5-fold to C$120.6 million ($92.2 million) from C$21.7 million, but was below the FactSet consensus of C$129.8 million. Kilograms sold rose 18% to 7,062 while cash cost to produce dried cannabis fell 22% to C$1.11 per gram. For fiscal 2020, the company expects revenue of C$575 million to C$625 million, above the FactSet consensus of C$571 million. "We are continuing to expand our capabilities internationally with solid progress during the quarter in Germany and South America and look to monetize non-core assets," said Chief Executive Irwin Simon. "We are confident in our market position and our ability to generate sustainable profit growth." The stock has rallied 25% over the past three months through Monday, while the ETFMG Alternative Harvest ETF has lost 5.8% and the S&P 500 has gained 11%.
Aphria Inc. ("Aphria" or the "Company") (TSX: APHA and NYSE: APHA) today reported its results for the second quarter ended November 30, 2019. All amounts are expressed in thousands of Canadian dollars, unless otherwise noted and except for per gram, kilogram, kilogram equivalents, and per share amounts. The Company also announced that Irwin D. Simon, will officially remove "interim" from his title, effective today. In addition to his responsibilities as Aphria's Chairman of the Board, Mr. Simon had been serving as Interim Chief Executive Officer since February 2019.
Last year wasn't encouraging for investors in cannabis stocks. And despite the company's comparatively strong revenues, Aphria (NYSE:APHA) stock was collateral damage as risk-off sentiment dragged the sector lower. The so-called Cannabis 2.0, in which edibles and vaping products were expected to drive marijuana-market revenues in Canada in late 2019, simply didn't pan out and investors punished practically every pot stock in sight.Source: Shutterstock Jan. 14's earnings announcement will mark the next chapter in the ongoing development of Aphria stock. However, I'm looking beyond January and past Cannabis 2.0 to a brighter future for this bold and ambitious company. If the share-price decline of more than 21% over the past year represents anything, it's a chance to own shares at a reasonable valuation and capitalize on Aphria's potential as a crown jewel among Canadian cannabis contenders. APHA Stock Gets a Nod of ApprovalAnalyst optimism isn't my number-one buy signal by any means. But a good word from a prominent financial firm certainly doesn't hurt. In the case of Aphria stock, analytics firm Jefferies bestowed the honor of naming it their top cannabis-sector pick -- not a minor feat amid a crowded sector.InvestorPlace - Stock Market News, Stock Advice & Trading TipsWith that, Jefferies also raised their price target for APHA stock from $8.30 to $8.40, citing "strong Canadian medical marijuana business, branding in the recreational market, and U.S. potential." I tend to concur with this sentiment, adding that Aphria never really needed Cannabis 2.0 to be a huge success; the company's revenues would undoubtedly benefit from expansion in the edibles and vaping sub-niches. But, the APHA stock price never depended on that. * 7 Inflation-Beating REITs to Ground Your Income Portfolio Not every analytic firm has been as effusive as Jefferies, mind you. Pablo Zuanic of Cantor Fitzgerald, for instance, cut his price target on APHA from $8.02 to $7.63; however, he did maintain his overweight rating on the stock. Note that Zuanic's forecast depends on lackluster global sales:"We continue to assume flat med sales at $8.8Mn, and no international sales (for now)."As I see it, the assumption of flat sales is far from assured.A positive surprise could force Zuanic and other analysts to revise their predictions, while (hopefully) propelling the share price higher. Standing Out with Consistent ProfitsBack-to-back profitable quarters might not be a notable feat in the world of blue-chips. However, among cannabis companies, it's a banner achievement.For the first fiscal quarter of 2020, Aphria attained this and blew analyst expectations out of the water; thereby separating itself from the pack of cannabis companies with uncertain profit profiles.While the analyst consensus was that Aphria would report a per-share loss of CA$0.02 in that quarter, the company made the critics look foolish with a gain of CA$0.07 per share; the previous quarter's gain had been CA$0.05 per share. Also impressively, the first fiscal quarter revenues came to CA$126.1 million while the net income was CA$15.8 million.These were unusual results within the cannabis sector. And analysts had little choice but to raise the expectations for the next earnings announcement. Specifically, the analyst consensus estimate is CA$130.3 million, representing a 3.3% increase over the actual results from the first fiscal quarter.Though it might move the Aphira stock price in the short term, it's ultimately of little consequence whether the company's posted result matches the expectation of CA$130.3 million in revenues. My focus is on the expansion and market share of the company itself. And Aphria remains a practically peerless power player with 255,000 kilograms of expected annual cannabis-product output and an astounding 1,300,000-square-foot production space in the company's Leamington greenhouse facility. The Takeaway on Aphria StockI must admit, I couldn't care less whether Aphria stock ranks as number one or number 101 on Jefferies' list of their top cannabis-stock picks. To be perfectly frank, moreover, I hope that you're not basing your trading decisions on analysts' opinions. Even if those analysts have decent track records.Of much greater consequence is Aphria's ability to deliver results and stay several steps ahead of its competitors. Two consecutive positive earnings surprises made some appointed "experts" look silly, and a third surprise might be in the cards. Yet, it wouldn't surprise me if Aphria stock recovers what it lost in 2019 -- and much more.As of this writing, David Moadel did not hold a position in any of the aforementioned securities. More From InvestorPlace * 2 Toxic Pot Stocks You Should Avoid * 7 Inflation-Beating REITs to Ground Your Income Portfolio * 7 Healthcare Stocks to Buy or Sell As Pricing Pressures Mount * 7 Earnings Reports to Watch This Week The post Aphria Stock Will Deliver Results Even If Cannabis 2.0 Disappoints appeared first on InvestorPlace.
With no reason to sell off, why wouldn't stocks continue higher on Monday? Let's look at a few top stock trades for Tuesday, when earnings season will begin with the banks. Top Stock Trades for Tomorrow No. 1: Canopy Growth (CGC)Source: Chart courtesy of StockCharts.comThe cannabis space is far from being out of the woods, but there are two names in the group that I have liked recently, one of which is Canopy Growth (NYSE:CGC).Canopy shares are hitting their highest level since October, as shares push higher on Monday. In doing so, CGC is reclaiming both the $22 level and the 100-day moving average.InvestorPlace - Stock Market News, Stock Advice & Trading TipsIt might get there in a few days or it might take a few months, but a rally up and over $25 into the upper-$20s shouldn't be out of the question now. * 7 Inflation-Beating REITs to Ground Your Income Portfolio On the downside, it would be best for CGC to hold $21.50 as support. Below that level and bulls will need to see the 50-day and uptrend support (purple line) need to hold as support. Top Stock Trades for Tomorrow No. 2: AT&T (T)Source: Chart courtesy of StockCharts.comResistance continues to hold near $39 for AT&T (NYSE:T), while Monday's pullback is sending T stock right into the 50-day moving average and uptrend support (blue line). This one is simple now.Below uptrend support and the 100-day moving average is in play. Below that and the $36 to $36.50 area is possible. If current support holds, look for a rebound back up to $39. If it can get over that level, AT&T could be looking at $40-plus. Top Stock Trades for Tomorrow No. 3: Roku (ROKU)Source: Chart courtesy of StockCharts.comWhile many growth stocks have been rallying, Roku (NASDAQ:ROKU) has been struggling. Shares did reverse off $127 support on Monday, but still face downtrend resistance (blue line) overhead.Falling below the 20-day and 50-day moving averages does not bode well for momentum, but Roku isn't completely stuck.A move back over downtrend resistance and the 50-day moving average could trigger a rally up to $150-plus. However, a move below $127 puts the $117 to $120 area on watch, with the 200-day moving average just below. Top Stock Trades for Tomorrow No. 4: Aphria (APHA)Source: Chart courtesy of StockCharts.comAt the top, I mentioned that I liked two cannabis stocks. CGC was the first and Aphria (NYSE:APHA) is the other. The latter isn't moving quite as nicely as the former, but it's showing breakout potential.Rallying into the 100-day moving average and downtrend resistance (blue line) now, APHA stock has a chance to power higher and draw in buyers.A move over $5.50 would add to its momentum and put the declining 200-day moving average in play. If it can't hurdle current resistance, see that it holds up over the 50-day moving average. Below that level puts $4.50 back on the table. Top Stock Trades for Tomorrow No. 5: Invitae (NVTA)Source: Chart courtesy of StockCharts.comWhat a wild ride it has been with Invitae (NASDAQ:NVTA). Shares are surging higher on Monday after an update from management on Sunday night regarding 2019 results and 2020 guidance.The news sent shares higher by about 10%, with many longs wondering if this is the start of something big or if it will ultimately deflate like the last pop.The stock is back over $17, while uptrend support (blue line) continues to hold. Shares are clearing downtrend resistance (purple line), and while investors will be looking at $20, that's not the level to watch. Instead, it's the 50-week moving average at $20.55.Over that level and NVTA can really start to find its momentum.Bret Kenwell is the manager and author of Future Blue Chips and is on Twitter @BretKenwell. As of this writing, Bret Kenwell is long ROKU, T, APHA and NVTA. More From InvestorPlace * 2 Toxic Pot Stocks You Should Avoid * 7 Inflation-Beating REITs to Ground Your Income Portfolio * 7 Healthcare Stocks to Buy or Sell As Pricing Pressures Mount * 7 Earnings Reports to Watch This Week The post 5 Top Stock Trades for Tuesday: CGC, T, ROKU appeared first on InvestorPlace.