Why Aphria Stock Is Surging, and Is It the Top Stock Right Now?

aphria stock forecast
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Aphria Stock Forecast

So far in 2018, Aphria Inc (OTCMKTS:APHQF, TSE:APH) has been a hard stock to pin down.

Depending on when you invested, Aphria stock has either been one of the better performers in your portfolio or one of the worst.

An Aphria stock forecast, therefore, is difficult to make, but I foresee the company going through several up-and-down periods before it stabilizes.

The thing about making APHQF stock predictions is that the stock hasn’t been able to log sustained gains for any length of time.

Sure, investors may see that the stock price has jumped by as much as 29% over the past month and begin dreaming of those sweet marijuana gains.

Chart courtesy of StockCharts.com

The problem with the Aphria stock forecast, however, is that you don’t have to go back very far to see that gains like this have been made in 2018—only to be followed by pullbacks.

While the near-30% boost may seem great, if you had invested in APHQF stock at the beginning of the year, you’d hardly be ecstatic. The share value is still down about 35% year-to-date.

Chart courtesy of StockCharts.com

Overall, I believe there is great potential in Aphria stock, maybe even enough to notch as high as 50% gains by year’s end.

But the problem with this Aphria stock forecast is that there are just too many uncertainties surrounding the company—the primary one being the reason for its downfall in 2018: concerns of overvaluation.

The company has shaken off those concerns for now, with its heavily reduced stock price, but what goes up must come down. I’d like to see a prolonged period of sustained success for the company before I can give a more positive forecast.

But for the optimists out there, let’s take a look at what makes Aphria stock so appealing, should the market regain confidence in the company.

APHQF Stock News

While charges of overvaluation have plagued Aphria Inc since the beginning of 2018, one thing that has been going well for the company is the news.

Recent APHQF stock news includes two major developments that may sway investor opinion back in the right direction.

The first story is the company’s move toward international expansion. Namely, Lesotho, Africa.

The first African nation to introduce licenses for cultivation, extraction, sale, and exportation of cannabis seems to be a good place to start if companies want to access the millions of potential customers in the region. (Source: “Aphria Forms Landmark Venture With South African Company Verve Group Of Companies,” Aphria Inc, May 28, 2018.)

Aphria is attempting to do so by forming a joint venture with South African company Verve Group. Together, they will form CannInvest Africa Ltd.

While the deal is a relatively meager sum (CA$4.1 million) compared to the massive blockbuster deals we’ve witnessed in the legal marijuana industry lately, it’s still an impressive move that positions Aphria toward an international market that is ripe for business.

The transaction will see CannInvest Africa acquire an interest in Verve Dynamics, a licensed producer of medical cannabis extracts.

The ability to be part of the medical marijuana supply in Lesotho is going to help Aphria’s long-term outlook and, therefore, improve the Aphria stock forecast.

Verve Dynamics intends to supply cannabis across the continent and even across the globe, via Aphria’s international distribution network.

Verve will supply high-grade low-cost cannabis isolates to the African continent and, through Aphria International’s distribution network, to markets across the globe.

“We are very excited to bring this deal, which was inherited through our acquisition of Nuuvera, to a very successful close,” said Aphria CEO Vic Neufeld. (Source: Ibid.)

“Given the abundant natural resources and our collective expertise and that of our partners, Verve is poised to become one of the lowest-cost producers of medical cannabis extracts in the world. This represents another significant pillar in our strategic international expansion, where our presence extends to more than 10 countries across five continents.”

The CannInvest Africa deal will see Aphria acquire a 50% ownership of CannInvest, which in turn will acquire a 60% ownership interest in Verve.

Another big play from Aphria was the announcement this week that it had approved a CA$55.0-million capital project to build what it’s calling an “Extraction Centre of Excellence” in Leamington, Ontario, Canada. (Source: “Aphria to build state-of-the art Extraction Centre of Excellence,” Cision, June 6, 2018.)

While the name could use some work, the facility is no joke. The project will be able to produce an estimated 200,000 kilograms of cannabis annually when completed.

While both of these moves are steps in the right direction—one regarding international expansion and the other in terms of capacity growth—they still don’t quite tackle the heart of the issue, which is that the market fears that Aphria stock is overvalued.

If things work out in Aphria’s favor, I see it being a top marijuana stock down the line. In the near term, its fate is much less certain.

Analyst Take

All the good news in the world sometimes isn’t enough to shake cemented investor sentiment.

My Aphria stock forecast considers a multitude of possible scenarios, from 50% gains to overall losses in 2018. In reality, I think it will end up somewhere in the middle, with tepid gains that won’t blow your socks off.

Projecting long-term, however, is where I see Aphria stock thriving.

The company has a number of strong investments internationally and has a good foundation in Canada, which will be extremely beneficial in the near term when marijuana legalization rolls out in the country.

While I predict intense volatility for APHQF stock, I also see the company being one of the stronger performers for marijuana stock bulls who want to get in the game for the long haul.