There’s a fundamental argument to be made for the cannabis firm Aphria (NASDAQ:APHA). It should be one of the few businesses benefitting from the pandemic. As everyone knows, this crisis has been stressful, posing a threat to our health as well as to the economy. So, if there was ever a time to enjoy some botanical solutions, this was it. That has bolstered the case for APHA stock.
But this isn’t just theoretical musing. In September, NPR reported that — according to market data from Nielsen — “total alcohol sales outside of bars and restaurants have surged roughly 24% during the pandemic.” Further, the research firm “found sales of spirits with higher alcohol content rose even faster, a more than 27% increase over last year.”
Clearly, that’s something to keep in mind if you’re considering investing in Aphria. And with pandemic-fueled vice purchases, it’s not just about the vice itself. Rather, people want to dull their worries.
But the upside narrative for APHA stock extends beyond escapism. As the Washington Post explained, Covid-19 and its impact has also resulted in sleep troubles for many. In fact, experts conjured up a name for this condition: “coronasomnia.”
What’s more, limited medical research implies that cannabidiol (CBD) — a non-psychoactive compound of the cannabis plant — can help with insomnia, anxiety, and other medical conditions. At a time when going to a healthcare facility could be a death sentence — particularly if you have underlying conditions — the appeal of natural, easily accessible therapies is incredibly strong.
So, there’s obviously potential upside for APHA stock. But it’s not just the medicinal angle that should have investors interested.
APHA Stock and the Transition of Power
Since the call of the election, the Trump administration has contested the results, making assertions of voting fraud. Naturally, that sent a chill through many folks who were just wanted clarity going into 2021. But so far, the evidence has been lacking.
That’s not to suggest that the evidence isn’t coming. But in a year full of misinformation, the unsubstantiated noise from the White House is disappointing and — so far — baseless. This was a put-up-or-shut-up time, yet the bravado has materialized into nothing but whining.
What does that mean for APHA stock? From one perspective, it’s a net positive. Nothing short of a cataclysmic, paradigm-shattering event –like the Electoral College going rogue, which is now an impossibility — will stop President-elect Joe Biden from assuming power. However, it’s still not a clear-cut victory for Aphria and the cannabis industry.
In part, that’s because there are five stages of grief and ardent Trump supporters are still stuck in denial. That means we could see further contentiousness down the road. So, a Biden administration would do well to find consensus wherever and whenever possible.
What’s more, Biden’s own position on marijuana is also an uncertainty — that could hurt APHA stock. Like with fracking, Biden plays coy on the issue. And although the President-elect has committed to decriminalizing cannabis, that’s a step below legalization, a catalyst that the company could really use.
Most assume that Biden will bend on the issue. For the sake of his administration, he better. Frankly, the cannabis industry represents massive job growth — something that, obviously, has been sorely lacking this year. Still, the political calculus remains unclear, so it’s a space to watch.
Resilience in a Sea of Trouble
Though the cannabis industry has many fundamental catalysts, it’s been a frustrating ride. Nevertheless, Aphria has gone against the grain in the markets. On a year-to-date (YTD) basis, APHA stock is up 6%.
In contrast, some of the company’s competitors have yet to break into positive territory for the year. For instance, Cronos Group (NASDAQ:CRON) is down 9% YTD and Tilray (NASDAQ:TLRY) is far worse, down a staggering 55%.
To be clear, there’s nothing comfortable about being levered to the cannabis space right now. But with growing demand for botanical products, you’d figure at least some of the players will start to recover. Given its resilience, Aphria stock may be one of those lucky few. Investors should take note.
On the date of publication, Josh Enomoto did not have (either directly or indirectly) any positions in the securities mentioned in this article.
A former senior business analyst for Sony Electronics, Josh Enomoto has helped broker major contracts with Fortune Global 500 companies. Over the past several years, he has delivered unique, critical insights for the investment markets, as well as various other industries including legal, construction management, and healthcare.