Aphria Inc (APHA Stock Report) has been a struggling marijuana stock in recent times to earn strong returns for investors. In the last two years, its stock has dipped over 25%. Although there have been some bright moments they have, nonetheless, been short-lived. But could recent developments pose a stronger year next year for Aphria?
Marijuana Stocks To Watch: Aprhia Inc. (APHA)
To begin, the company is doubling its production capacity. This follows obtaining a growing license for its subsidiary Aphria Diamond. The facility has a production space of 1.2 million sq. ft. It also has the potential of growing 140,000 kg of cannabis annually. With this addition, Aphria’s production increases to 2.4 million sq. ft. with annual production capacity reaching 225,000 kg.
Besides increasing the production capacity another thing that should be noted is the idea that the facility has “industrial-scale automation tech.” This means that it will be able to handle various tasks like transporting plants, waste disposal, trimming and much more. This helps the company bring costs down in price thus helping it add to its margins in the process.
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Similarly, industry prices may come down so that they can compete with low prices in the black market. The new license allows Aphria a chance to offer competitively priced products which help it improve costs.
Aphria To Take Advantage of Cannabis 2.0
Also, the doubling of capacity will benefit the company which already has many new products ready to go following legalization of Cannabis 2.0. The legalization permits the sale of edibles and derivative products. Aphria offers a wide range from gummies to vape pens. If the company takes advantage of low costs of production it could have an edge over rivals by offering lower prices and maximizing margins.
Also APHA stock seems to have stabilized as it has been flat in the last few weeks. With the stock trading around its book value and 6x its sales, it could attract some attention. As a result, Aphria may be one of the marijuana stocks to watch in the new year.