With 2018 now in the books, investors can look back and confidently proclaim it to be the “Year of Cannabis.” At no time in the history of the marijuana industry have such significant advancements been made. As you can imagine, the legalization of recreational marijuana in Canada tops the list. No single action validated the weed industry as a legitimate business model more than the first industrialized country in the world giving pot the green light in October.
But there was so much more than this that occurred last year. We saw a handful of U.S. states and foreign countries wave the green flag on cannabis in some capacity, witnessed the U.S. Food and Drug Administration approve its first cannabis-derived drug, and saw President Trump sign the Farm Bill into law in late December. The Farm Bill legalized hemp and hemp-based cannabidiol (CBD) — CBD is the nonpsychoactive cannabinoid best known for its perceived medical benefits.
Should pot stock Aphria be on your buy list this year?
On the other hand, marijuana stocks didn’t fare as well. After two very strong years for pot stocks, many prominent names delivered double-digit percentage losses for investors in 2018. Among the worst performers was Canadian cannabis grower Aphria (NYSE:APHA), which shed 61% last year. Considering how quickly the pot industry is growing and countries are legalizing, the big question to ask is this: Should you buy Aphria as a rebound candidate in 2019 or leave it be?
Let’s take a look at both sides of the argument.
Aphria could bounce back in a big way in 2019
Possibly the biggest reason for investors to be excited about Aphria’s prospects this year is the proposed hostile takeover bid from Green Growth Brands, which completed a reverse takeover of Xanthic Biopharma a few months prior in order to become a public company. The offer from Green Growth Brands values Aphria at approximately $2.1 billion, and was a nearly 46% premium to where the company had closed on the Toronto Stock Exchange on Dec. 24.