Over the past months, Aphria Inc (TSX:APHA) (NYSE:APHA) has emerged as one of the better-performing companies in the cannabis space. Despite the fact that Aphria stock went below $3.00 this morning on the NYSE, it could still be the best bet for investors looking to enter the cannabis sector.
The company has the infrastructure, the production capabilities, and a healthy cash balance that could all combine to fuel its growth. However, the stock is still down by as much as 75% from its all-time highs that were reached in 2019.
One of the biggest problems faced by many cannabis companies last year was high inventories at a time when the market was suffering from oversupply. However, Aphria has not suffered from this problem as much. Unlike many companies, it didn’t overbuild production facilities at a great expense and so was able to avoid some of the damages suffered by many other companies.
At the time of writing, Aphria stock is down by 4% to $2.99.
In November, the company had inventories worth C$152 million and began the fiscal year with C$92 million in inventory.
Aphria has managed to create a pretty strong balance sheet. It ended the previous fiscal year with around C$500 million in cash and then went on to raise as much as C$100 million from an institutional investor. This is an important thing to keep in mind. The company is cash-rich, and on top of that, Aphria has built a business that is cash flow positive.
Aphria expects to get a boost from higher sales due to the rollout of more stores in Canada and the maturing of the cannabis 2.0 markets. In addition to that, the completion of the Aphria Diamond facility is set to take the company’s total production levels to 255,000 kilos a year at its peak.
Aphria stock made a new 52-week low of $2.73 earlier in today’s session.
What do you think about the company?