Top Pot Stocks: Aphria (NYSE:APHA), Tilray (NASDAQ:TLRY)

The impact of the coronavirus outbreak has been felt across all sectors and the cannabis industry has not been spared either.  The COVID-19 pandemic has disrupted cannabis business and now analysts have moved to revise their positions of various Canadian cannabis stocks.

For instance, on Thursday, Jeffries revised Canopy Growth Corp’s (NYSE:CGC) rating to “Hold” and downgraded Tilray (NASDAQ:TLRY) to “Underperform.” Also, Eight Capital’s Graeme Kreindler upgraded Aphria (NYSE:APHA) to “Buy” after the company posted strong results in its recent quarter.

Analyst upgrades Aphria after impressive quarterly results

Kreindler indicated that the cannabis industry has experienced uncertainty and operational challenges due to the coronavirus pandemic. However, they believe that Aphria provides a convincing investment opportunity in the cannabis sector.Aphria reported a 20% sequential revenue growth with a profit something that has been elusive in the Canadian pot sector.

However, the analyst indicated that the coronavirus pandemic could hurt the Ontario-based operator if there is a dip in consumer spending. However, the most interesting thing is that the stock is overly cheaprelative to its competitors.

Canopy has enough cash to weather downturn but Tilray stock could drop to $5

Canopy has been dealing with its fair share of problems and on Thursday it announced measures aimed at conserving cash. The company is closing operations in South Africa and will halt growing in Colombia as well as stop hemp farming in the state of New York and close a Saskatchewan facility. As a result, the measures will amount to a pretax charge of between CA$700 and CA$800 million.

However Jefferies’ Ryan Tomkins and Owen Bennet who revised Canopy’s rating to “Hold” indicate that the company has enough cash to run it through this economic downturn and might not need capital raise through the sale of equity.

On the other hand, although Tilray stock has almost doubled in recent weeks, Jefferies expects to see a downturn in the stock with a target price of $5. Hedge funds have been trimming their short positions resulting in a short squeeze on Tilray’s small stock float thus the surge.

About Travis Garlick 1774 Articles
Been writing about and trading stocks since 2013. Manage a group of micro-cap investors on Facebook with over 15,000 members. Turned $8,500 into 185k the first year I started trading stocks and haven't looked back.