The cannabis industry hasn't escaped the recent market sell-off. The industry as a whole, as measured by the Horizons Marijuana Life Sciences ETF, is down by 30% year-to-date. Aphria (NYSE: APHA), one of the largest cannabis companies by market cap, has performed slightly worse: Its shares are down by about 30.8% since the beginning of the year.
However, the Ontario-based pot grower is now much more attractively valued than it was just a few months ago. At writing, Aphria is trading at only 2.5 times forward sales, which is a bargain when compared to many of its peers in the cannabis industry. For instance, Canopy Growth (NYSE: CGC) is currently trading at more than 10 times forward sales. Does Aphria's comparatively attractive valuation make the company a buy?
Aphria is one of the few cannabis companies that has managed to sign supply agreements with every Canadian province. Also, the company's projected peak production capacity is about 255,000 kilograms, making Aphria one of the leaders in this category in the Canadian pot market. Thanks to these factors, Aphria is well-positioned to profit from the cannabis market. In particular, the company is planning to take advantage of the market for derivative products, which officially opened in Canada on Oct. 17.
Source Fool.com