Marijuana stocks come in several varieties. There are a handful of marijuana-focused biotechs. Some are marijuana growers. And others are companies that support the marijuana industry.

Aurora Cannabis (NASDAQOTH:ACBFF) ranks as one of the top marijuana growers, while The Scotts Miracle-Gro Company (NYSE:SMG) stands out as one of the largest suppliers to marijuana growers. Both companies have enjoyed success in the past, but which is the better marijuana stock now? Here's how Aurora and Scotts Miracle-Gro compare.

Marijuana growing in greenhouse

Image source: Getty Images.

The case for Aurora Cannabis

I think the investing argument for Aurora Cannabis can be summarized in three sentences. One, the global medical marijuana market is rapidly expanding. Two, Canada is set to legalize recreational marijuana later this year. And three, Aurora Cannabis is well positioned to capitalize on both of the first two points.

It's easy to think only about the Canadian medical marijuana market when discussing Aurora Cannabis, since the company is based in Canada. However, countries around the world have also legalized medical marijuana. One of the biggest markets is in Germany.

While the global medical marijuana market is steadily increasing in size, the recreational marijuana market in Canada is about to explode. The country's government initially targeted July 2018 as the magic date for allowing recreational marijuana, but it now looks as if recreational marijuana sales will begin in September. Regardless, the market will soon open, and it could easily top $5 billion annually.

Where does Aurora Cannabis fit into these pictures? The company's medical marijuana sales in its latest quarter more than tripled from the prior-year period. Most of these sales were generated in Canada, but sales from Aurora's German subsidiary accounted for over one-fifth of total revenue.

Aurora is already ramping up for legalization of recreational marijuana in Canada. The company has made acquisitions and expanded facilities to increase its production capacity. Aurora has also laid the groundwork for retail sales of recreational marijuana, including buying a stake in Liquor Stores N.A. Ltd., which will convert some of its locations to cannabis retail stores. It also plans to build new cannabis retail stores.

The case for Scotts Miracle-Gro

You could probably capture the marijuana-related investing thesis for Scotts Miracle-Gro in only one sentence: It's the go-to source for many of the critical supplies marijuana growers need.

As the markets for both medical and recreational marijuana around the world increase in size, demand should soar for the products needed to grow marijuana. We're talking about fertilizer, hydroponics, and lighting systems that are must-haves for marijuana growers, both large and small.

Scotts Miracle-Gro has targeted this market probably better than any other company. Its subsidiary, The Hawthorne Gardening Company, has made multiple acquisitions to bolster its hydroponics and lighting systems offerings. In the quarter ended Dec. 30, Hawthorne contributed nearly 35% of Scotts' total revenue, up from 31% of total revenue in the prior-year period.

Still, though, most of Scotts Miracle-Gro's revenue doesn't come from catering to the marijuana industry. The company markets a wide range of lawn and garden products, including Turf Builder and Roundup weed killers, Miracle-Gro plant food, and Ortho bug killers. 

There's one other thing investors can like about Scotts Miracle-Gro -- its dividend. The company's dividend currently yields 2.33%. Scotts uses just over half of its earnings to fund the dividend program, so the nice dividend payments should keep on flowing. 

Better buy

On paper, Scotts Miracle-Gro looks like the better buy. It has much higher revenue than Aurora Cannabis does. The company has a longer track record. Scotts is positioned to profit from the marijuana boom, but it's not totally dependent on the one market. Also, while Scotts stock trades at a lofty forward earnings multiple of 17.5, it looks like a bargain compared to Aurora.

But in my opinion, Aurora Cannabis is the better stock to buy. Why? It all comes down to growth.

Scotts Miracle-Gro certainly has the opportunity to grow, but the company reported dismal results in its latest quarter and only projects revenue growth in 2018 of 2% to 4%. Aurora Cannabis, on the other hand, is growing its top and bottom lines by leaps and bounds. And I think that growth will pick up exponentially over the next year.

Granted, Aurora Cannabis' market cap of $4 billion looks astronomically high, considering the company made less than $30 million over the past 12 months. However, Aurora could realistically lay claim to 20% of the Canadian recreational marijuana market and a nice chunk of the growing global medical marijuana market. Those growth prospects put the stock's valuation in a different light.

Aurora certainly has some risks. And it's not the kind of stock that every investor would like. But between these two marijuana stocks, I think Aurora Cannabis has the greater potential.

Keith Speights has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.