Cannabis stocks are starting to pick up steam once again as the new year gets underway. The marijuana sector, in general, has seen impressive gains ever since the Federal election. Now that a new administration is coming into the White House, cannabis enthusiasts are expecting full-fledged legalization of some sort within the first 90 days or so. As such, pot stocks are jumping up on any good piece of news to latch onto. Aphria (NYSE: APHA), one of Canada’s top cannabis producers, reported its second fiscal quarter financial results on Thursday, which more than surprised investors and analysts alike.
Sales had climbed to a new record for the quarter, with the company aiming to capture around 30% of the Canadian cannabis market in the future. Revenue came in at $160.5 million, which is a 33% jump from the same time one year ago. Net profits came in at around $39.5 million, a pretty large margin for the cannabis company, although this figure is more or less unchanged from a year ago.
“The recent election will likely provide a stronger near-term potential for change of federal cannabis regulations and at Aphria we are ready and well-positioned for it,” said Aphria CEO Irwin Simon during conference call with financial analysts on Thursday. “We expect change to happen faster and decisions to be made sooner under the new Democratic leadership.”
Aphria is one of the few Canadian cannabis stocks that have managed to be quite profitable. Despite this, in comparison to most of its rivals, shares still at a relative discount in contrast to companies like Canopy Growth (NYSE: CGC), HEXO (NYSE: HEXO), etc. However, the marijuana sector is still trading at pricey multiples regardless, with Aphria boasting a price-to-earnings (P/E) ratio of 46.9.
Aphria’s stock jumped up as much as 21.1% on Thursday in response to the news, with similar jumps reported in other pot stocks as well. Tilray, which announced back in 2020 that it would merge with Aphria during the second quarter of 2021, also jumped by a similar amount in association with the news. The combined company would become one of the largest pot stocks on the market.
Besides that, other cannabis companies are up as well as the anticipation of a Biden presidency, such as Hexo, which is up 13.8% on Thursday. Most cannabis speculators are extremely bullish right now, for good reason. Most people are expecting that the new administration would make cannabis legalization one of its first issues, being less divisive than some other issues.
Aphria Company Profile
Aphria, which is headquartered in Ontario, produces and sells medicinal and recreational cannabis. The company operates through retail and wholesale channels in Canada and internationally. Aphria is a main distributor of medical cannabis to Germany and has operations in over 10 countries outside of Canada. However, it does not currently operate in the U.S. due to federal prohibition. The company is focusing on expanding through international cultivation and distribution into the global medical cannabis market. Aphria also offers multiple products under a portfolio of recreational cannabis brands, including Solei, RIFF, and Broken Coast. – Warrior Trading News
