Is Aphria Eyeing CannTrust’s Assets?

Aphria (APHA) had stellar Q4 earnings results. Its operating metrics significantly improved, turning its bottom line positive. In addition to becoming one of the few profitable cannabis companies, it beat analysts’ expectations. Consequently, its stock rose about 41% on August 3. To learn more, read Here’s Why Aphria Is Surging Today.

CannTrust struggling

While Aphria’s positive news attracted investors’ attention last week, other cannabis companies had negative news. CannTrust (CTST) announced that the Ontario Securities Commission was investigating the company’s compliance to Health Canada regulations. Its stock saw severe selling pressure after the report, and the company’s interim CEO is interested in selling its assets.

Aphria interested in CannTrust?

Not too long ago, Aphria was in CannTrust’s position. Its stock saw selling pressure following allegations of a company scandal. However, the company managed to get back into the game under the leadership of Irwin Simon, who replaced Vic Neufeld as CEO.

On August 2, in an interview with Bloomberg, Simon alluded that Aphria might be interested in CannTrust’s assets, saying that they were “some great assets.”

Still growing

Aphria’s many improvements have encouraged significant growth at the company. Its cannabis and equivalent product revenue has grown 111% sequentially, surprising the market. Next fiscal year, the company expects adjusted EBITDA of about 88 million–95 million Canadian dollars, and revenue of 650 million–700 million Canadian dollars. Considering Aphria’s guidance and potential interest in buying CannTrust’s assets, there appears to be room for growth in the cannabis sector.

However, Canopy Growth (WEED)(CGC) believes otherwise. Whereas Aphria has expressed CannTrust’s assets, Canopy Growth has stated it was done buying small producers. Aphria may be buying CannTrust’s assets to fill the void the company could leave.

In other news, Scotts Miracle-Gro (SMG) also reported its earnings last week. The company’s growth surged as a result of the cannabis sector. To learn more, read SMG Stock’s Cannabis Bet Is Paying Off.