Any time a company increases its valuation by more than 250% in less than a year as Aphria Inc. (TSX:APH) has done since January 2 of this year, investors take notice. If past performance is any indication of what the future has in store for Aphria shareholders, backing up the truck and loading up on shares may just be the way to go.
Noting that few of these companies have actually turned a profit in the pre-legalization space -- Aphria among them -- I have been a noted supporter of cannabis investors jumping on the Aphria bandwagon instead of other high-profile competitors which have seen their valuations increase at a much faster rate in recent years. Aphria in many ways represents a "slow(er) and steady" model, growing at a pace which allows for profitable growth, allowing the business to continue to grow using a larger percentage of internal capital as opposed to raising higher amounts of debt or equity to fund its growth plans.
In a race to gobble up as much market share as possible before the impending legalization of marijuana in Canada which is less than a year away, Aphria, like its competitors, has been doing everything it can to grow its piece of the global marijuana pie; in fact, Aphria has been one of the most aggressive Canadian marijuana producers at pursuing the U.S. cannabis market, a lucrative market which continues to grow at breakneck speed in States where cannabis is legalized either for medicinal or recreational use, or both.
For these reasons, I believe Aphria deserves a harder look than its peers currently, despite sky-high valuations in this sector.
Invest wisely, my friends.
