Aurora Cannabis (NYSE:ACB) shareholders might have been able to tell investors buying Tilray (NASDAQ:TLRY) stock to enjoy the ride while they could. Tilray enjoyed a nice pop after its initial public offering last month, only to give up most of the gains. Aurora is in the same boat: up more than 30% earlier this year but now down more than 10% year to date.

As thrilling -- or dejecting -- as short-term stock gyrations are, though, they're not very meaningful in helping investors determine whether to buy a stock. What matters most are the long-term opportunities and the ability of companies to take advantage of those opportunities. How do Aurora and Tilray compare in these key areas?

Red Canadian maple leaf cut-out next to marijuana buds and marijuana cigarette pack

Image source: Getty Images.

The case for Aurora Cannabis

Opportunities for Aurora Cannabis are easy to find. You can start with the company's existing focus on the Canadian medical marijuana market. Aurora also has significant global medical marijuana opportunities, especially in Germany. And, of course, there's the Canadian adult-use recreational marijuana market scheduled to open in October of this year.

Probably the best reason to consider buying Aurora Cannabis stock is that the company is positioned well to succeed in all of these opportunities. The most important ingredient to this success is having enough product to meet demand. Aurora shouldn't have a problem on that front.

The company recently completed its acquisition of MedReleaf, which, like Aurora, is one of the top five marijuana growers in Canada. This transaction gives Aurora a combined funded capacity of more than 570,000 kilograms per year.

But capacity isn't the only thing needed to build market share. Companies also need the governmental approvals and distribution networks in place to serve domestic and international markets. Aurora Cannabis checks off these boxes as well.

Aurora is already a top producer of medical marijuana in Canada. It has supply agreements in place for recreational marijuana with Alberta and Quebec. The company invested in Alcanna (formerly Liquor Stores NA), which is building a retail network to sell recreational marijuana. 

What about outside of Canada? Aurora Chief Corporate Officer Cam Battley stated in June that few marijuana growers have the "experience, demonstrated ability to work under rigorous regulations, excess capacity, and access to capital" to succeed in international medical marijuana markets. Of course, he thought that Aurora was one of those few businesses. The company currently has a presence in Germany, Italy, Denmark, and Australia. Aurora is also establishing a cannabis production facility in Malta. 

The case for Tilray

All the opportunities for Aurora Cannabis apply to Tilray, too. Tilray can even claim an earlier start than Aurora in several areas.

Tilray became one of the very first suppliers of medical marijuana in Canada in 2014. In 2016, the company became the first Canadian business to export medical marijuana to Europe. It was also the first medical marijuana grower to obtain the European Medicine Agency's Good Manufacturing Practices certification.

While Tilray doesn't have as much production capacity as Aurora does, it should still have plenty of capacity to be a major player in both domestic and international markets. The company projects that it will have 912,000 square feet of growing space by the end of this year. Around 682,000 square feet of this total will be in Canada with another 230,000 square feet in its Portugal facility.  

Tilray is also a little ahead of Aurora in lining up supply agreements for the adult-use recreational marijuana market in Canada. The company already has deals with British Columbia, Quebec, Manitoba, the Northwest Territories, and Yukon. Tilray thinks it will be able to ink supply agreements in the near future with Alberta, Ontario, and the Atlantic-coast Canadian provinces.

As for reaching international markets, Tilray has shipped medical marijuana to Argentina, Australia, Chile, Croatia, Cyprus, the Czech Republic, Germany, New Zealand, and South Africa. The most important of these markets is Germany, where the company partnered with Noweda, one of the largest wholesalers of pharmaceutical products in the country.

Better marijuana stock

One way to determine which marijuana stock is a better buy is to look at their valuations in relation to their annual production capacity. In other words, see how much bang for the buck you would get by buying Aurora Cannabis or Tilray.

Aurora Cannabis' market cap currently is close to $2.9 billion. Factoring in the company's projected annual production capacity, the cost of the stock is around $5,087 per kilogram of annual capacity. By comparison, Tilray's market cap is a little under $2.2 billion. A rough estimate of the company's projected annual capacity translates to well over $15,000 per kilogram. Based on these admittedly ballpark calculations, I think Aurora Cannabis is the better pick.

Keep in mind, though, that Aurora could face significant challenges in the not-too-distant future. Canada is clearly headed for a scenario where supply will outstrip demand within a few years. Aurora's executives have expressed confidence that international demand will be a sizable enough opportunity that the supply glut in Canada isn't worrisome. But if global market demand doesn't increase quickly enough, even large marijuana growers like Aurora could be in trouble. 

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.