Should You Give Up on Aphria (TSX:APHA) and Buy Aurora (TSX:ACB)?

This week, Aphria (TSX:APHA)(NYSE:APHA) reported its earnings and analysts were more than shocked at the results.

It was a massive letdown for shareholders who had high hopes for the cannabis company. Aphria remains in third place among Canadian marijuana companies, but now some are worrying that it won’t keep that spot for long.

Then we have Aurora Cannabis (TSX:ACB)(NYSE:ACB). This company has remained in the second spot for quite some time and has made some major announcements lately that have investors excited.

So, what should investors do? Ditch Aphria for Aurora? Here’s my take.


Aphria’s earnings released on Apr. 15 were pretty darn dismal, to be sure. The stock lost a net total of $108.2 million, and while analysts expected $80 million in revenue the company, the company managed to squeak out $73.6 million instead.

The news sent the stock plunging almost 15%, and it now sits far below that approximately $13.50 price at around $11 per share at the time of writing. But the company’s interim CEO Irwin Simon believes the sell off is premature.

The reason revenue dropped is two-fold. First, the company took on a loss for its $50 million non-cash impairment on its Latin American assets. Second, the company made a big switch when it decided to move from manual production to automated. Starting over isn’t easy, and this definitely hurt production for this quarter.

However, that loss is a temporary one, and it has a lot of analysts convinced. Simon stated Aphria is still working towards its $1 billion sales objective by 2020 and is on pace to do so. It has 2.4 million square feet of production capacity to start amping up production once it’s completely revamped. But until then, sales may slack.

But if you’re not looking to sell in the short term, I would hold on to your stocks. The company should either rebound or even be acquired by a company like Cronos Group that has the cash and means to broaden its portfolio. That’s making this stock entirely undervalued. In the next 12 months, it could reach as high as $26 per share if everything goes to plan.


Aurora Cannabis has remained steady as a rail when it comes to its goals, but those goals haven’t necessarily been kind to investors. The company is on pace to reach its production of 120,000 kilograms per year by the end of 2019. Once all its current projects are done, however, that could shoot way up to 630,000 kilograms per year!

The problem? Those projects have cost the company a lot of money and diluted shares in the process. Most recently, it announced it would be expanding it facility in Alberta by 33% to 1.62 million square feet.

Another side of the projects are the company’s acquisitions, which seems to happen almost constantly. In the past week, it announced a new merger with Hempco for about $63.4 million. In the last year, Aurora has acquired a number of companies such as MedReleaf, CanniMed, and Farmacias Magistrales, just to name a few. This has cost the company about $3.5 billion in acquisitions alone.

Granted, the company is now set up to start pumping up production on a global scale. In fact, its most recent news made Bank of America change the company’s status from a “hold” to a “buy,” stating the company is “one of few truly global companies in the cannabis sector.”

What should you do?

Honestly, these companies remain in the top spots among cannabis companies, and if you own either, I would just hold on for now. Both are in a transition phase that could see some huge payout, and I think it’s too early to make any calls about either company’s future.

But if I’m buying either stock right now, I’d personally buy Aphria. It’s completely undervalued and has the potential to really shoot up in the short term. For a long-term buy and for around the same price per share, I’d buy Aurora. This company’s production cost per 100 grams of marijuana is going to be so small, it’s going to blow other companies out of the water. So, really, depending on what you want, you can’t go wrong here.

You might be missing out on one of the biggest opportunities in Canadian investing history…

Marijuana was legalized across Canada on October 17th, and a little-known Canadian company just unlocked what some experts think could be the key to profiting off the coming marijuana boom.

Besides making key partnerships with Facebook and Amazon, they’ve just made a game-changing deal with the Ontario government.

One grassroots Canadian company has already begun introducing this technology to the market – which is why legendary Canadian investor Iain Butler thinks they have a leg up on Amazon in this once-in-a-generation tech race.

This is the company we think you should strongly consider having in your portfolio if you want to position yourself wisely for the coming marijuana boom.

Learn More About This TSX Stock Now

More reading

Fool contributor Amy Legate-Wolfe owns shares of Aurora Cannabis.

Source: The Fool
Should You Give Up on Aphria (TSX:APHA) and Buy Aurora (TSX:ACB)?
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