AUS
NZ
UK
CA
USA
IND
Summary
- Cannabis stocks spiked on Monday after both Republicans and Democrats talked about the federal legalization of recreational marijuana in the US.
- Aphria Inc is set to release its first quarter fiscal 2021 results on October 15 and is currently one of the top trending stocks on the TSX.
- Cannabis seller Fire & Flower Holdings reported a 158 per cent YoY revenue growth in its latest financial results released in September.
Cannabis stocks Aphria Inc (TSX:APHA) and Fire & Flower Holdings Corp (TSX:FAF) jumped on Monday, October 12, after Democrats and Republicans promised to legalize recreational marijuana in the United States during presidential election campaigns. Republican Vermont Governor Phil Scott said he would allow recreational pot sales in the state. Democrat vice presidential candidate Kamala Harris said Joe Biden would green light cannabis sales at the federal level if elected president.
Legalizing pot in the US is likely to have an impact on Canadian cannabis firms on the lookout for larger markets. Pot sales boomed in the country amid the coronavirus pandemic. Although the S&P/TSX Cannabis Index records over 39 per cent decline this year, cannabis sales have made quite a headway across the country. Cannabis made up for over C$9.6 billion in Canada’s GDP in July, said a recent report by Statistics Canada.
Stocks of top Canadian cannabis maker Aphria Inc trended high in the US markets on Monday. Fire & Flower scrips also remain in high demand among investors. Let’s delve into analyzing these two stocks to understand them better.
Aphria Inc (TSX:APHA)
Current Share Price: C$ 7.53
Aphria Inc is poised to release its first quarter fiscal 2021 results on Thursday, October 15. It is currently one of the top trending stocks on the TSX, with an average share trading volume of 2.7 million in the last 10 days.
One of the top pot producers in Canada, Aphria Inc shares dipped amid the COVID-led market crash back in March. However, it recuperated steadily on the stock market over the last seven months and posted revenue growth for the fifth consecutive quarter despite the pandemic.
Aphria Inc currently has a market cap of C$ 2.17 billion. Its price-to-book (P/B) ratio is 1.197, its price-to-cash flow (P/CF) ratio is 2,681.6 and its debt-to-equity (D/E) ratio is 0.23, as per the data on the TSX.
APHA STOCK PERFORMANCE
Aphria stocks collapsed to C$ 3.03 on March 17, its lowest point this year, as the pandemic-hit markets nearly wiped out millions of investors’ wealth. The stocks have steadily recovered since, climbing about 70 per cent in last six months and nearly 33 per cent in the last three months. Its scrips registered a growth of 11 per cent this year.
APHA FINANCIAL RESULTS
Aphria Inc saw a year-over-year (YoY) increase of 18 per cent in its net revenue of C$ 152 million in the fourth quarter fiscal ending 31 May 2020. Its adjusted EBITDA of C$ 8.6 million was up 49 per cent quarter-over-quarter (QoQ) in Q4 FY20.
The Leamington-based company also recorded net loss of about C$ 98 million in Q4 FY20, against net income of C$ 15.8 million in Q4 FY19. Aphria’s cash and cash equivalents were C$ 497 million as of May 2020.
Fire & Flower Holdings Corp (TSX:FAF)
Current Share Price: C$0.83
Financial books of Fire & Flower Holdings, a micro-cap cannabis seller with a market valuation of C$ 136 million, showed a 158 per cent YoY revenue growth in its latest earnings report released in September 2020.
The company has expanded across the country with 50 stores (up from 20) between August 2019 and 2020. It recently wrapped up formalities for licensing two retail stores in Vancouver, British Columbia, and also opened two stores with retail chain outlet Circle K in the province of Alberta.
Based in Edmonton, Alberta, Fire & Flower is an independent retail store chain which deals in cannabis and other products such as cannabis oil, pot-themed accessories, apparels, etc.
FAF STOCK PERFORMANCE
Fire & Flower stocks had dropped to C$ 0.32 on March 19 amid the pandemic-led market crash. But it has since rebounded by an impressive 159 per cent in seven months’ time.
Its scrips have climbed 33 per cent in the last six months and nearly eight per cent in three months. However, its stock price is down 7.7 per cent this year.
FAF FINANCIAL RESULTS
Fire & Flower’s total revenue, with a 158 per cent YoY growth, amounted to C$ 28.6 million at a gross profit of 34.8 per cent in 13-week-period ending 1 August 2020. Its adjusted EBITDA incurred a loss of C$ 0.3 million.
Fire and Flower continued majority of its operations via its digital platforms through the coronavirus pandemic. Stores that remained opened practiced in-store safety protocols, the company said. It reported total expenses worth C$ 12.5 million in the second quarter, up from C$ 9.9 million a year ago. Fire & Flower’s loss of operations amounted to C$ 2.5 million, while its net and comprehensive loss stood at C$ 29 million in the latest 13-week-period.
