Aphria Stock (TSX:APHA) (NYSE:APHA) Falls Back From highs: What to Expect Now?

April was not a particularly great month for many stocks and especially so for those who belong to the cannabis sector. However, Aphria Inc (TSX:APHA) (NYSE:APHA) proved to be one of the exceptions in this regard and went against the tide to record substantial gains.

Major Developments

Aphria stock managed to deliver gains of 25.5% for the month, and there are two significant factors behind the spike. In March, the stock had recorded significant declines as investors sold off their positions due to the impact of the coronavirus pandemic on supply chains and sales. However, those fears had not actually amounted to much, and many investors returned to pick up the stock in April.

That was one of the reasons behind the rally. In addition to that, the company’s announced its financial results for the fiscal third quarter on April 14, and the numbers were impressive. Its German arm CC Pharma managed to beat analysts’ estimates for both revenues and for earnings. Despite the company’s decision to withdraw its yearly guidance, investors seemed to be happy to buy into the Aphria stock.

The company possesses one of the strongest balance sheets in the industry, and if an investor believes in the long term prosperity of the cannabis sector, Aphria could well be one of the stocks to watch out for.

Aphria has been one of the more conservative companies in the industry and had avoided the pitfalls of heavy investments on acquisitions or infrastructure building. Hence, it is one of the better-positioned stocks at this point in time. This is a time when many other cannabis companies are struggling, and hence, Aphria has the chance to move away from the pack. At this point in time, the stock is trading at only 2.6 times its sales, and that is a significantly cheap valuation. In contrast, Canopy Growth, the biggest cannabis company by market cap, is trading at a price to sales ratio of 22.