This Popular Cannabis Stock Is a Steal Right Now

Aphria Inc. (TSX:APHA)(NYSE:APHA) is winning the cannabis stock race. Here’s why new investors should back up the truck.

| More on:

Bouncing 4% off its recent slump, Aphria (TSX:APHA)(NYSE:APHA) has a loyal fan base as one of the leading cannabis stocks to own in the legal Canadian weed space. Aphria is a lodestar business, leading the way in a turbulent sector after grasping the Holy Grail of pot stocks: profitability. By growing its sales, Aphria is showing other pot stocks how to do it with a top line that’s seen a staggering 849% year on year growth.

Aphria is the hero that cannabis bulls need right now

Coming in at number six on the brand-new TSX 30, Aphria was part of a slew of cannabis stocks taking the Canadian investment scene by storm over the last three years. Growth in demand for pharma-grade marijuana for the medical market has also helped Aphria shoot to prominence. Its brand-focused approach has seen the integrated business soar over that three-year time period with its share price clocking up +479%.

Alongside hemorrhaging Canopy, market-spooking HEXO, and licence-dodging CannTrust, Aphria is the profitable stock that weed investors have been waiting to rally around. The whole sector has risen moderately on Aphria’s recent positive quarterly results, despite cratering on HEXO’s plunge. Indeed, such is Aphria’s clout that Australian producer Althea tumbled on news of Aphria’s divestment of its stake this week.

Extreme volatility does not equal a bear market

To some pundits doubtful of the profitability of the sector, it may well appear that cannabis is in a bear market. But this isn’t quite the case — despite having suffered huge losses, marijuana keeps bouncing back. And while the sector has seen a huge percentage wiped off its value, the pot stock space has shown resilience, as investors weed out the weakest players and reward the strongest with brief rallies.

Aphria’s ditched half its value over 2019, and a newcomer may conclude that pot stocks are just one bug bust. However, the marijuana race is far from over, with edibles yet to hit shelves and a major growth market — namely cannabis drinks — yet to be legalized in Canada. With foreign markets coming online and steady growth in sales, Aphria could still grow far beyond the $14 high point it hit earlier in the year.

Aphria is also Canada’s sixth fastest-appreciating growth stock over the last three years. Investors new to the marijuana patch should let that sink in for a moment. A highly volatile sector to be sure, but Canadian cannabis is far from a bear market. Week after week, the sector has bounced back from one sell-off after another. While frontline stocks like Aphria have seen disastrous losses this year, the weed patch is far from dead.

The bottom line

Pot stocks were bouncing heading into the weekend, proving after yet another bloodbath in the sector that pot stocks are likely to remain popular with Canadian investors. Aphria is looking like the best pick of the bunch, packing elusive profitability which is likely to see consistent upward momentum in its share price. While other pot stocks may tank in the year’s final quarter, Aphria looks golden.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium service or advisor. We’re Motley! Questioning an investing thesis — even one of our own — helps us all think critically about investing and make decisions that help us become smarter, happier, and richer, so we sometimes publish articles that may not be in line with recommendations, rankings or other content.

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

More on Cannabis Stocks

Cannabis business and marijuana industry concept as the shadow of a dollar sign on a group of leaves
Cannabis Stocks

Should You Buy Canopy Growth Stock or Green Thumb Stock Today?

Let's dive into two cannabis giants, and which one may be the better pick for long-term investors.

Read more »

Farmer smiles near cannabis crop
Cannabis Stocks

Could Aurora Cannabis Stock Finally Recover by Year-End?

Down 99% from all-time highs, Aurora Cannabis stock is focused on improving profit margins and expanding sales of its medical…

Read more »

Farmer smiles near cannabis crop
Cannabis Stocks

Are Pot Stocks About to Surge Again? 

With pot stocks making big moves of late, many investors are now asking whether the cannabis sector is worth investing…

Read more »

Farmer smiles near cannabis crop
Cannabis Stocks

Can Pot Stocks Aurora Cannabis and Canopy Growth Bounce Back in Q4?

Down over 99% from all-time highs, Canadian pot stocks such as Aurora Cannabis and Canopy Growth remain high-risk bets.

Read more »

Worker tags plants at an industrial cannabis operation
Cannabis Stocks

Can Canopy Growth Stock Finally Recover in 2024?

Down 98% from all-time highs, Canopy Growth remains a high-risk investment in 2024 given its weak fundamentals.

Read more »

Tech Stocks

3 No-Brainer Stocks to Buy With $20 Right Now

These three stocks are easy buys for those who don't have all that much to spend, and want long-term growth…

Read more »

Pot stocks are a riskier investment
Cannabis Stocks

Slow Burn: Is Aurora Cannabis Finally a Good Buy in June?

One of the benefits of choosing from some of the most beaten-down market segments like cannabis is that even a…

Read more »

Caution, careful
Cannabis Stocks

I Wouldn’t Touch This TSX Stock With a 60-Foot Pole

I wouldn't touch Canopy Growth Corp (TSX:WEED) stock with a 60-foot pole.

Read more »