The Canadian cannabis sector continues to see sales expand while the related stocks haven’t generally rallied. Aphria (APHA) is a prime example of a sector stock unable to generate any momentum due to a reset of expectations to more reasonable levels. My investment thesis remains bullish on the stock here around $6 after urging investors to buy below $4 during the COVID-19 crisis.

APHA Aphria Inc. daily Stock Chart

Breakout EBITDA

The main Canadian LPs have suffered from an inability to reach positive EBITDA due to over production and expense structures built for global companies multiple the size of current business. Aphria is one of the only companies to already generate EBITDA profits and the soon-to-be released quarter is the potential breakout quarter for the stock and the sector.

Aphria had previously promoted some very aggressive EBITDA numbers while the other large Canadian cannabis LPs like Aurora Cannabis (OTC:ACB) and Canopy Growth (OTC:CGC) can’t even figure out how to eliminate large losses. A year ago when reporting the FQ1 results, Aphria outlined a path to adjusted EBITDA between C$88 million and C$95 million for FY20:

Source: Aphria FQ1’20 earnings release

The company had only reported a quarter where adjusted EBITDA was just C$1 million. Aphria spinning this level of EBITDA into another C$90 million over the next 3 quarters appeared highly unlikely. The update even came halfway into FQ2’20 leaving only 7.5 months left in FY20. Unsurprisingly, Aphria came nowhere close to reaching those targets in part due to COVID-19.

For this reason, the upcoming FQ1’21 earnings on October 15 are so crucial. Aphria actually hit FQ4’20 adjusted EBITDA of C$8.6 million and the current estimates are for numbers to nearly double in the last quarter.

Industry data have shown Aphria taking market share in a growing market. Canadian cannabis sales grew substantially in July with

(RTTNews) – Canadian cannabis company Aphria Inc. said it has completed its first shipment of dried cannabis flower from its facility in Canada to Germany. The company noted that the shipment strengthens its position as a leading cannabis company in Germany and the European Union.

Aphria said that the first shipment of dried flower to its wholly-owned German subsidiary, CC Pharma GmbH, was completed from its Aphria One facility in Ontario, which is certified for European Union-Good Manufacturing Practices or EU GMP.

CC Pharma is a distributor of pharmaceutical products to more than 13,000 pharmacies in Germany.

“We are leveraging our strong medical platform and multi-faceted German strategy, which combines domestic cultivation, import licenses and large distribution infrastructure, to increase access to high-quality medical cannabis for patients worldwide. We remain excited about future milestones, including the completion of our cultivation facility in Neum√ľnster, Germany, which we expect will be completed in Q2 FY2021,” said Irwin Simon, Chief Executive Officer of Aphria.

The German market is considered to be one of the most highly sought-after developed medical cannabis markets in the world.

Aphria said its German operations were preparing for the import of EU-GMP certified cannabis from Canada, allowing for shipments to CC Pharma in order to leverage CC Pharma’s expansive in-country distribution network.

Aphria said it launched several CBD-based wellness brands in Germany in the first quarter of 2021.

These include CannRelief brand, a line of cosmetic oils and creams as well as supplements; Evoque brand, which includes skin products such as face creams and serums; and CannaPet brand, a line of products that bring relaxation, relief or recovery to pets.

The German market is the largest and fastest growing market for medical cannabis in Europe.

According to the Medical Cannabis Network, the medical cannabis market in Germany is currently