Is Aphria the king of Canadian pot stocks?
Marijuana investors probably still would have considered cannabis companies last year Aurora Cannabis ( PBR -1.82% ) and canopy growth ( CGC 0.14% ) to be industry leaders in the Canadian casserole market. But with both companies now struggling to stay out of the red and sometimes struggling to grow their front lines, another cannabis producer, Aphria (APHA)had the opportunity to prevail.
Although Aphria was a big name in the cannabis industry a year ago, investors weren’t considering it in the same breath as Aurora or Canopy Growth. A year ago, Aphria’s market cap was around $1.6 billion, a far cry from Aurora’s $8 billion valuation or Canopy Growth’s astronomical market cap of over $10 billion. dollars. Since then, Aphria’s market cap has shrunk somewhat, but at $1.3 billion, it’s now slightly higher than Aurora’s $1.1 billion. Meanwhile, Canopy Growth currently sits at a market capitalization of around $6.3 billion.
Let’s see why Aphria has become a relatively bigger name in the industry and why it is likely to continue to increase in value compared to its peers.
Aphria has normally been profitable, unlike many cannabis companies
When Aphria released its fourth quarter results on July 29, investors were shocked to see that the company had incurred a net loss of C$98.8 million. The stock price reflected this disappointment, dropping from $6 before earnings to around $4.50 today. It was only the second time in five quarters that the Ontario-based cannabis producer suffered a loss, and it was well above the C$7.9 million loss it had suffered two periods earlier.
By contrast, Canopy Growth has been in the red in each of its five most recent reporting periods, and in four of those quarters its losses were well over C$98.8 million. It’s a similar story for Aurora, whose investors are also expecting losses. The company has only had one profitable quarter in its past five reporting periods.
Benefits are not that common in the cannabis industry, and staying in the dark with any consistency, as Aphria has, is rare. And that’s one of the reasons the company stands out from its peers in Canada.
It is also a market share leader
Aphria reported sales of C$152.2 million in its latest quarterly results. This represents a 5.4% increase over third quarter results and an 18.4% improvement over the prior year period.
First-quarter 2021 results, released Aug. 10, showed Canopy Growth’s revenue for the quarter was just C$110.4 million. Although this is a 22% increase over the prior year period, it is still well below Aphria’s tally.
Aurora’s most recent quarterly results, which the company released on May 14, showed even weaker net sales figures of C$78.4 million. Aphria’s lowest sales figure over the past five reporting periods was C$120.6 million, still higher than the most recent results of its two Canadian rivals.
Is Aphria a buy today?
Here’s a quick look at how the three stocks have performed over the past 12 months:
Although down, Aphria’s stock is doing better than the other companies listed here, and even the Horizons Marijuana Life Sciences ETFs ( HMLSF 2.64% ) in its entirety. And it’s a trend that should continue, given that Aphria remains a cheaper buy when considering the price-to-sales ratio of these three stocks:
With Aphria shares falling over the past few weeks, now could be an interesting time to buy shares of this great Canadian cannabis company. It’s definitely made a name for itself as Canada’s top pot stock, and it’s hard to find a better buy in Canada right now, especially considering its high sales numbers and bottom line. impressive.
This article represents the opinion of the author, who may disagree with the “official” recommendation position of a high-end advice service Motley Fool. We are heterogeneous! Challenging an investing thesis — even one of our own — helps us all think critically about investing and make decisions that help us become smarter, happier, and wealthier.