Aphria Stock Forecast
One of the most interesting companies in the marijuana industry this year has been Aphria Inc (OTCMKTS:APHQF, TSE:APH). Once a favorite pick of mine, the stock was stuck in the dumps for months on end.
I cautioned investors to play the long game and find the lowest point of its fall, then pounce. That turned out to be sound advice, and APHQF stock has been on the rise over the past month, gaining more than 50% since late August. But what does the current Aphria stock forecast hold?
In my mind, things are looking up. First you have the company’s impressive run at the end of August. Of course, many other stocks in the marijuana industry were also bolstered at the time, but Aphria has been one of the strongest gainers, especially after a year of subpar performances.
It’s worth noting that the industry-wide correction hit the Aphria particularly hard because many analysts assumed that the stock was overvalued. This is a common charge in the cannabis industry, but some companies suffer for it more than others, such as with Aphria Inc taking a beating at the beginning of this year.
Now, however, the company has made a number of moves to dissuade that line of thinking (not to mention that it lost a good chunk of its share value).
Besides signing supply agreements with Canadian provinces and increasing its supply capacity (both integral to a marijuana stock’s success as Canadian legalization nears), the company has made one major move that has me beaming about the Aphria stock forecast: its expansion into the Latin American market.
The company completed a buyout of Latin American and Caribbean assets from international marijuana company Scythian Biosciences Corp (OTCMKTS:SCCYF, CNSX:SCYB). The Latin American market has been the market to expand into this year, with several other prominent marijuana companies making forays into the region.
When Aphria first announced in July that it would be taking over Scythian-subsidiary LATAM Holdings, the deal was valued at CA$193.0 million. Since then, Aphria stock has received such a boost that the original deal, whereby Scythian would receive 15.7 million shares at a “deemed” price of $12.31 each, is now valued at roughly CA$300.0 million.
So, on top of giving Aphria a strong “in” to the Argentinian, Colombian, and Jamaican markets, the deal also speaks to the impressive rise of APHQF stock over the past several weeks.
Chart courtesy of StockCharts.com
“With a combined population of nearly 640 million, and with significant momentum from numerous countries introducing new or modernizing existing medical cannabis legislation, the region represents a significant opportunity for long-term growth,” said Aphria CEO Vic Neufeld. “This acquisition firmly cements Aphria’s leadership in the region and on the global cannabis stage.”
Neufeld had previously served on the Scythian board as well, strengthening the connection between the two companies.
Scythian also became the largest single shareholder of APHQF stock following the deal.
“This transaction contains all of the elements we have been looking for and will help accelerate our growth trajectory and portfolio,” said Rob Reid, CEO of Scythian Biosciences. “The deal substantially enhances our funding for strategic early-stage investments.”
The Aphria stock forecast looks good moving forward, having rebounded nicely from what was a dismal start to 2018.
The company’s expansion into the Latin American market is a great step toward long-term success, while its recent surge in stock value speaks to the hype building around many of the top marijuana stocks in the run-up to Canadian marijuana legalization.
Furthermore, having been battered as badly as it was earlier in the year, there’s a good chance that Aphria stock may be undervalued now, or at least appropriately valued in the eyes of many investors, dramatically lowering the chance of a severe backlash hitting APHQF stock again.
All these factors combine to make Aphria Inc one of the more intriguing companies to watch.