Cannabis Stocks Advisory

Aphria Diamond Greenhouse Doubles Production Capacity

November 04 2019 - Pot Stock Aphria Secures Key Piece Of Plan To Reach This Aggressive Target By Investors Business Daily

Canadian pot producer Aphria (APHA) on Monday said it received a grow license for its Aphria Diamond greenhouse, widening its production footprint and giving it a key piece of its plan to meet aggressive sales targets for the year. Aphria stock reversed lower, and other marijuana stocks were mixed.

Aphria Diamond is Aphria's second cannabis greenhouse facility in Leamington, Ontario. The facility gives Aphria an extra 1.3 million square feet of production space, and is capable of growing 140,000 kilograms of cannabis per year, the company said.

Aphria said it now has more than 2.4 million square feet of grow space, when combining the real estate of its Aphria One facility and Broken Coast, a cannabis producer it bought last year. At an annualized rate, those resources give Aphria a production capacity of 255,000 kilograms.

CEO Irwin Simon, in a statement, said Diamond "more than doubles" Aphria's production capacity in Canada. Getting Aphria Diamond online is a crucial component of the producer's plans to put up sales of 650 million-700 million Canadian dollars for its fiscal 2020.

Revenue from distribution operations will make up "slightly more than half" of that figure. But Aphria, whose net cannabis sales came in at 30.1 million Canadian in its most recently reported quarter, would need to sell a lot more weed to round out that sales target.

In September, Simon told IBD he expected to have Aphria Diamond running by January, with sales growth coming in the latter half of the fiscal year.

Aphria owns 51% of Aphria Diamond. The facility is technically a subsidiary of the cannabis producer. It is overseen via a partnership between Aphria and commercial greenhouse company Double Diamond. Government data shows initial licensing for the facility kicked in on Friday.

Aphria Stock, Marijuana Stocks

Aphria stock reversed sharply lower and closed down 1.2% at 5.13 in the stock market today. As with other marijuana stocks, Aphria's ratings from IBD remain weak. Its Composite Rating is 16, on a scale of 1-99, with 99 the best possible. Its EPS Rating, which measures profit growth, is 39.

Aphria posted a profit during its most recent quarter. But, as MarketWatch noted, the profit was driven by the methods it used to value convertible debt and an investment in another company.

But broadly, marijuana stocks have suffered as investors grow more agitated with elusive profits and disappointing sales. Canada legalized recreational cannabis a year ago. But the early days of the rollout were plagued by shortages, along with production and distribution problems. Analysts and executives have also said Canada still has too few retail stores to sell their product, hurting sales.

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