Canada Post Strike Vote Hits Aphria Inc. (TSX:APH) Stock Hard: Should You Buy Low Today?

Aphria Inc. (TSX:APH) stock has bounced around over the past two weeks with two major news stories having a big impact.

Aphria (TSX:APH) stock plunged 16.91% on September 13. Cannabis stocks suffered a broad sell-off later in the trading day after Canada Post workers voted in favour of a strike. There are legitimate fears that a prolonged stoppage could result in disruption for an industry that is nearly a month away from getting off the ground.

Current medical cannabis users could also be forced to seek alternative methods if deliveries cease in the coming days and weeks. This has led some to speculate that these users could turn to the black market. It is a grim bit of news after cannabis stocks had gained considerable momentum ahead of recreational legalization.

The news comes after Aphria had built considerable momentum following its announcement that it had divested its United States-based assets. Back in late 2017, investors learned about the investigation from TMX Group into cannabis companies that had business interests south of the border. Recreational cannabis remains illegal on a national level in the United States, and U.S. officials had vowed to move against companies that were seen to skirt this fact in conducting business. Cannabis companies that violated this federal law were at risk of being de-listed from the main index.

On September 6, the company announced that it had entered a share-purchase agreement that resulted in the completion of a sale of 64 million shares in Liberty Health Sciences. As part of the deal, Aphria will retain the option to repurchase the shares or replacement securities within a period up to five years.

Investors appeared to breathe a sigh of relief as Aphria stock shot up past the $20 mark. Even after the recent double-digit plunge, shares of Aphria are up 79% over the past month. In light of recent events, investors may be torn over whether to stick with the stock as legalization looms.

In truth, the decision by Aphria to divest its U.S. assets is an unfortunate one, even if it was a move it had to make. Investors may want to look at the move as a tactical retreat, especially considering Aphria’s stipulation that it can repurchase shares or securities over a five-year period. There has been a gradual move among the U.S. establishment to toy with cannabis legalization, but for the time being, it appears it will remain a states-only issue.

The company followed up its divestment with an announcement that it had signed yet another wholesale supply agreement with Emblem Cannabis Corporation. The agreement stipulates that Aphria will supply 175,000 kilograms of high-quality cannabis over a five-year period starting in May 2019.

Aphria stock is still a highly attractive target, especially among the largest cannabis producers. Indeed, the Canada Post strike vote could provide a great buy-low opportunity. The two sides have until September 26 to come to a deal, and the smart money is on an agreement being reached to avert catastrophe.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium service or advisor. We’re Motley! Questioning an investing thesis — even one of our own — helps us all think critically about investing and make decisions that help us become smarter, happier, and richer, so we sometimes publish articles that may not be in line with recommendations, rankings or other content.

Fool contributor Ambrose O'Callaghan has no position in any of the stocks mentioned.

More on Investing

A cannabis plant grows.
Cannabis Stocks

Canopy Growth Stock Is Rising But I’m Worried About This One Thing

Canopy Growth stock is soaring as the legalization effort makes real progress in both Germany and the United States.

Read more »

young woman celebrating a victory while working with mobile phone in the office
Investing

3 Roaring Stocks to Hold for the Next 20 Years

These top TSX stocks are excellent long-term buys, given their multi-year growth potential and solid underlying businesses.

Read more »

Two seniors float in a pool.
Dividend Stocks

TFSA: How to Earn $1,890 in Annual Tax-Free Income

Plunk these investments into your TFSA to earn passive income and avoid the taxman.

Read more »

grow dividends
Investing

Here’s My Top 3 TSX Stocks to Buy Right Now

Even though the TSX has been rising, there are still some good bargains out there. Here are three top compounding…

Read more »

Target. Stand out from the crowd
Investing

Prediction: This Canadian Growth Stock Could Double by 2030

Alimentation Couche-Tard (TSX:ATD) is a top growth stock that could do well over the next six or so years.

Read more »

Businessman holding AI cloud
Tech Stocks

Could Investing $20,000 in Nvidia Make You a Millionaire?

Nvidia stock has made investors millionaires in the last 10 years. Is it too late to invest to become a…

Read more »

Engineers walk through a facility.
Dividend Stocks

1 TSX Stock I Wouldn’t Touch With a 10-Foot Pole

AtkinsRéalis (TSX:ATRL) is one TSX stock I'd never invest in.

Read more »

money cash dividends
Stocks for Beginners

Have $500? 3 Absurdly Cheap Stocks Long-Term Investors Should Buy Right Now

If you're looking for cheap stocks, these three have a huge future ahead of them, all while costing far less…

Read more »