How to Buy Aphria Inc. (APHA) Stock

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Contributor, Benzinga
May 20, 2021
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Aphria Inc. is a small Canadian cannabis producer with big aspirations. As social attitudes and governmental regulations surrounding cannabis change in the United States, the sector could provide plenty of unique investment opportunities.

Interested in an investment in cannabis? Learn how to buy Aphria Inc. stock today.

Merger with Tilray

  • Tilray shareholders voted to approve a proposed merger with Aphria at a special shareholder meeting on Friday April 30, 2021.
  • The merger will result in the formation of the world's largest cannabis company by revenue.
  • 99.38% of Aphria shares represented at its shareholder meeting voted in favor of the merger.
  • Aphria shareholders will own approximately 62% of outstanding shares.
  • The merger is expected to be completed in the second quarter of 2021.

How to Buy Aphria Inc. (APHA) Stock Summary:

The basic steps to invest in Aphria are the same you can follow to buy any stock. You can buy stock in 3 simple steps, but each requires multiple decisions as you determine your needs and limits.

  • Choose a broker: In order to purchase shares on the open market, you’ll need a brokerage account to complete the transaction. Before choosing a broker, you’ll need to determine your trading goals and make sure the firm is a good fit.
  • Fund your account: In order to buy shares, you’ll need to get money into your account. If you’re looking to buy shares right away, make sure your broker has an instant deposit feature that will let you trade before your cash settles.
  • Locate and buy APHA shares: Aphria Inc. is a commonly-traded stock, and you should have no problem finding shares from any online broker right now. Purchase your desired amount of shares using a limit order to make sure you get a price close to your ideal entry point.

How to Buy Aphria Inc. (APHA) Stock

The cannabis trade is flying high, and Aphria Inc. has been a major beneficiary. Despite enlisting only 1,200 full-time employees near the banks of Lake Erie, Aphria has become a household name in the marijuana sector thanks to its explosive stock growth.

Buying a stock that will inevitably encounter regulatory hurdles will always carry risk. Cannabis laws and mindsets are far more relaxed in Canada than the U.S. And while the path to federal legalization is clearing, there’s no guarantee on a timeline. Know the risks with these types of securities, whether you’re trading for long-term growth or short-term speculation.

  1. Pick a brokerage.

    Your first step is to choose a brokerage to host your account. Online brokers have completely dropped commissions on equity trades, so you’ll be able to purchase APHA shares for free pretty much anywhere. 

    Choose a brokerage with a vision and platform that best suits your trading goals. Most will have a demo version with a paper trading account, so take the platform for a test spin before signing up for the real thing. 

    Online brokers also sometimes offer special perks like deposit bonuses for new clients, so check out the promos before completing your account application.

  2. Decide how many shares you want.

    How much do you want to invest in Aphria? Your investment amount should be based on your account balance, time horizon and expectations for the stock.
     
    Investing more than 2 to 3% of your portfolio in any stock is risky, let alone a volatile cannabis company. Figure out how much you want to invest, when you’ll take profits, and yes, how much you’re willing to lose on the trade should it turn south. 

    Once you’ve determined your purchase amount and risk parameters, you can look for an entry point.

  3. Choose your order type.

    You need to enter your order to execute your trade, but there’s more than one type of order to choose from. Different order types have different methods of execution. 

    Market orders will execute immediately at the National Best Bid and Offer (NBBO) price, but limit orders won’t execute until a predetermined price point is reached.

    Limit orders allow for more precise trading, which is important when trading volatile stocks like APHA. Market orders are susceptible to slippage in volatile sessions and the price you get might fall outside your ideal range.

  4. Execute your trade.

    Once you’ve chosen an order type, press buy on your broker’s platform to complete your trade. This will send your trade request to the broker’s order desk, who routes it to an exchange or market maker for execution. Once the order is filled, the shares will appear in your account.

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Aphria Inc. Stock History

Aphria Inc. isn’t a new startup in the cannabis space. The company went public in 2015, and shares went for less than $1 for the entirety of the first year of trading. In March 2016, APHA shares finally made a sharp move over $1 and catapulted up over $5 by Thanksgiving.

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Screenshot from Benzinga Pro

Aphria’s revenue began to increase as demand for cannabis products soared. The company more than doubled gross profits from 2017 to 2018 and doubled them again between 2019 and 2020. Despite continued growth, APHA languished for most of 2019 before bottoming out during the height of the COVID-19 sell-off in March 2020.

APHA shortly dipped back below $2 before posting a solid recovery to close 2020. Then 2021 started with a bang as the shares went parabolic, leaping from $8.57 to $18.98 in less than 6 weeks. Aphria’s rise in 2021 has been meteoric, and it’s among the biggest winners in the cannabis sector to start the year.

Pros to Buying Aphria Inc. Stock

The cannabis market can be volatile, but an investment in Aphria can bring benefits like:

  • Regulatory headwinds: Aphria Inc. is a cannabis grower and distributor that resides a short boat ride away from a wide range of new potential customers in the United States. Many U.S. states have already permitted marijuana use for medical and recreational use, and the calls for federal revamping will only grow louder from here.
  • Increasing profits: Aphria Inc. has shown growth in gross profits for 4 straight years, including a jump from $75 million to $190 million between 2019 and 2020.
  • Stock volume and trend: The cannabis sector is hot, and Aphria is among the most fiery components. Shares are gaining volume, and the price movement has been consistently upward.

Cons to Buying Aphria Inc. Stock

Of course, it’s not all benefits with no risk. If you choose to invest in Aphria, keep the following in mind:

  • Schedule I controlled substance: Despite the relaxed attitudes and less strict local laws, cannabis is still illegal in the U.S. at the federal level. No amount of attitude changes will get legislation changed quickly. Cannabis legalization in the U.S. probably still has another hurdle or 2 ahead of it.
  • Decreasing gross margins: Growing marijuana is time consuming and expensive, so scaling up could prove difficult to smaller firms like Aphria. The company has seen gross margins under 40% for 3 consecutive quarters now, which somewhat highlights the difficulty of mass producing a fickle plant like cannabis. Aphria isn’t getting the same bang for their buck on sales lately, and that could be a problem down the road.

Is Aphria a High Roller?

Few stocks are more popular in the cannabis sector than Aphria Inc. With shares doubling in less than a month, the trade is likely to become crowded and new traders should be cautious. Aphria Inc. share price appreciation has been so stark that the company would nearly qualify to be a large cap firm in the U.S.

Trading the cannabis sector will likely continue to produce winners as more states relax laws and federal regulators begin drawing up ideas to change the current status of the substance. 

The long-term outlook for cannabis producers is likely good, but the ride up surely won’t be as smooth as APHA’s stock chart currently looks. Understand the risks and rewards of trading in this sector before putting your hard-earned money to work.