Before the COVID-19 market meltdown, there were major concerns regarding the medical as well as adult use of cannabis, which affected the stock values within the industry significantly. However, these problems have taken a backseat currently. The investors are now scourging for companies with proper valuation. And, Aphria Inc (TSX:APHA) (NYSE:APHA) might be one such company that might interest the investors.
Aphria Stock Outperforms
The stock of Aphria has been on a decline for over a year since this time. With the fear of the coronavirus hitting the markets, the stock declined to near $2. It has also managed to bounce back by 70% of these lows, moving beyond the 50-day moving average. As is the case within the cannabis industry, the value of the stock has plunged since the beginning of the year.
COVID-19 pandemic has made the investors consider the balance sheets of the company and look at their true valuations. The recent move in Apria stock suggests that the investors believe the stock to be worth more than $2.
The company, despite being among the lesser-known stock (as compared to giant cannabis players like Aurora Cannabis, Canopy Growth, etc.), has high liquidity with a market cap of a mere 900 million dollars. The cash and cash equivalents stand at 515 million dollars. Further, the additional cash amounting to 100 million Canadian dollars (over 76 million US dollars) was injected into the company in January by an institutional investor – the name of which remains anonymous.
The investor in exchange acquired 14.04 million units. Each of these units is made of one share of the company as well as half part of a warrant for purchasing a share of common stock for a 24-month period from the end of January at a price of 9.26 Canadian dollars. With investors looking for strong balance sheets, Aphria – with its high liquidity- might become a stock for investors wanting to invest in the cannabis industry.