Should Canadians Buy Aphria (TSX:APHA) Stock Today?

The coronavirus market crash is far from over yet. Non-essential sectors now face even brisker headwinds than previously was the case. This is especially the case in an overcrowded and unsettled space like cannabis. The move by the Ontario government to strike the sector from the “essentials” list was disheartening. But for some pot stocks, it could even have proved the death knell.

Overshadowed by competitors, the once rocketing Aurora has become more than just a disappointment. Its recent staff layoffs, massive writedown, and one-for-12 share-consolidation plan are more than simply unappealing. While the scheme at hand is to strengthen balance sheet strength, these moves are losing fans fast in an already crowded field. Revenue growth will now be key for pot stock pundits and fence sitters.

Aurora’s five-day performance was down 6% at the start of the week. Aphria (TSX:APHA)(NYSE:APHA), however, was up by an incredible 19% over the same period, as investors remained bullish on its outperformance. Steep positive momentum clearly hasn’t left the legal cannabis space just yet. Indeed, Aphria is a popular name that has seen quarter after quarter of strong performance. It’s been surprisingly resilient amid the coronavirus market crash.

Investors may want to weigh these two stocks carefully. Even if you happen to be bullish on Aurora, its recent moves are no doubt alarming. Indeed, this is a beaten-down cannabis name that is so close to delisting that it’s approved a reverse stock split just to bump its share rice over the dollar mark. Aurora and similarly wavering stocks in the Canadian cannabis space are far from risk-free names to carry on holding in a long-term cannabis portfolio.

Reasons to hold Aphria stock for the long term

Aphria has gained an outstanding 61% in the past month. This shows just how much upside potential this name still commands. Investors eyeing a second green gold rush for steep returns should consider stacking shares in Aphria. Indeed, as long-term buys go, Aphria could explode after the woes of the coronavirus lockdown give way to a relief rally. Its 2.5-year cash runway gives it ample fuel for the journey.

A consensus median target price of $7.65 at the moment shows that this $5 stock could offer substantial upside. And this is the conservative estimate. Take a look at the high target price of $12.25. Aphria is the name to buy for cannabis investors looking to more than double their money. Watch Aphria closely for a coming dip and consider building a position slowly. Keep cash on hand to snap up on incremental weakness.

The bottom line

Low-cost production meets profitability in the long-term outlook for Aphria. This is one name unlikely to get bought out, delist, or get priced out of the market. Aphria is a rare long-term buy in a sector that has had everything thrown at it. However, cannabis is proving resilient to the coronavirus market crash so far. Indeed, Aphria is still a winner, despite cannabis’s uneven retail rollout and classification as a non-essential sector.

Just Released! 5 Stocks Under $49 (FREE REPORT)

Motley Fool Canada’s market-beating team has just released a brand-new FREE report revealing 5 “dirt cheap” stocks that you can buy today for under $49 a share.

Our team thinks these 5 stocks are critically undervalued, but more importantly, could potentially make Canadian investors who act quickly a fortune.

Don’t miss out! Simply click the link below to grab your free copy and discover all 5 of these stocks now.

Claim your FREE 5-stock report now!

More reading

Fool contributor Victoria Hetherington has no position in any of the stocks mentioned.

The post Should Canadians Buy Aphria (TSX:APHA) Stock Today? appeared first on The Motley Fool Canada.

Source: The Fool
Should Canadians Buy Aphria (TSX:APHA) Stock Today?
The Fool

The Motley Fool
Contributor for
The Motley Fool is dedicated to helping the world invest — better. Founded in 1993 by brothers Tom and David Gardner, The Motley Fool helps millions of people attain financial freedom through our website, podcasts, books, newspaper column, radio show, mutual funds, and premium investing services.

In all we do, we take a different approach.

We believe – and have proven over decades – that the individual investor can beat the market.

We believe that anyone can do it, even if they don’t have a lot of time or money to devote to investing.

We believe in a long-term outlook, helping people build wealth over time.

We believe that the person best positioned to take care of your financial future is you.

And we work tirelessly on behalf of our hundreds of thousands of members who are enjoying the opportunities that come with having enough money to do the things that matter to them.

While we are headquartered in Alexandria, Va., The Motley Fool advocates for the individual investor around the globe with offices in the UK, Australia, Canada, Singapore, and Germany.

Related posts