Shares of the Canadian pot company Aphria (NYSE: APHA) rose by an eye-catching 25.5% during the month of April, according to data from S&P Global Market Intelligence. Aphria's shares spiked last month for two fundamental reasons.
First off, the company's shares were hammered in March by the COVID-19 sell-off. Investors fled pot stocks during the month of March because of concern over global supply chains and the possible negative impact of shelter-in-place orders on demand for legal cannabis in general. These theoretical headwinds haven't come to much so far this year, and cannabis investors apparently decided to go bargain hunting last month. Aphria's stock was clearly one of the beneficiaries of this trend in April.
Secondly, Aphria posted stellar fiscal third-quarter results on April 14. Thanks mainly to its German subsidiary CC Pharma, Aphria handily beat Wall Street's consensus estimates for both its bottom and top lines for the three-month period. What's more, investors even brushed off the fact that Aphria -- like most Canadian cannabis companies -- decided to pull its financial guidance for the remainder of the current fiscal year due to the ongoing pandemic.
Is Aphria's stock still worth buying? It all depends on your view of the global cannabis market. On the bright side, Aphria has one of the strongest balance sheets in the industry and a business model capable of producing growth even in this harsh economic climate. Most other pot companies, in contrast, are burning through their cash reserves at an alarming rate. So if you're optimistic about the long-term prospects for the legal cannabis space, Aphria's stock might be a worthwhile buy.