Canadian pot stocks have been hitting the skids ever since the adult-use recreational market opened up on Oct. 17. This marked sell-off, though, may have finally created some compelling long-term bargains.

OrganiGram Holdings (NASDAQOTH:OGRMF) and Aurora Cannabis Inc. (TSX:ACB) (NYSE:ACB), for instance, have both seen their shares slide in a significant way over the last two weeks of trading. As both of these pot companies are well positioned to become top players in this red-hot industry, though, it might be a good time to consider which of these stocks is the better buy. Let's dig in to find out.

Picture of a marijuana bud.

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The case for OrganiGram

One of OrganiGram's strongest features is its extremely low cost of production, stemming from the use of a three-tiered growing system. This year, for instance, the company has already lowered its production cost from 2.65 Canadian dollars to CA$0.80 per dried flower. Equally as impressive, OrganiGram's selling price per gram of dried flower has been among the bottom of the pack at a little over CA$7.00 so far this year.

Larger competitors like Canopy Growth Corporation (TSX:WEED) (NYSE:CGC) have consistently been selling their dried-flower products at far higher prices of more than CA$8.30 per gram this year -- giving OrganiGram a distinct pricing advantage over some of its chief rivals. 

Interestingly enough, though, OrganiGram's lower prices haven't meant a drop-off in quality. OrganiGram's products took home several accolades at the Canadian Cannabis Awards in 2017, and the company has been nominated for another nine awards this year. In short, OrganiGram has a proven track record of producing premium cannabis products in a cost-efficient manner. 

Another feather in OrganiGram's cap is the company's expanding international footprint. OrganiGram kicked off its invasion of Australia not long ago through its medical cannabis partner Cannatrek Medical, resulting in shipments of both dried flower and cannabis oil earlier this year. The company has also signed an agreement with Alpha-cannabis to begin exporting medical-grade marijuana to the all-important German market. That's a major step forward, as Germany is widely expected to become the most valuable market outside of North America. 

On the valuation front, OrganiGram does have some short-term issues. At present levels, the company's stock is trading at a monstrous price-to-sales ratio of 60 right now. The good news, though, is that OrganiGram's forward-looking price-to-sales ratio (2019) is expected to improve markedly to 6.3, thanks to a projected upswing in sales emanating from the legalization of recreational marijuana in Canada. While that's still not a cheap valuation in classic terms, OrganiGram's stock is among the lowest priced within its high-flying peer group.     

The case for Aurora

Aurora's most attractive value driver for investors is arguably its top-notch production capacity. With 4.5 million square feet of funded production capacity, Aurora falls behind only Canopy Growth Corporation on this key characteristic. The company is also aiming to lower its product cost to less than CA$1 per gram at its Aurora Sky facility in Edmonton. 

Like most other top players in this emerging field, Aurora is also looking beyond Canada's borders to drive growth. Aurora presently has nascent operations in a wide swath of countries, including Australia, Brazil, Denmark, Italy, and Germany, among others. While these efforts probably won't dramatically impact Aurora's top line anytime soon, the company does appear ready to jump into action if and when these secondary international markets follow Canada's lead.

Next up, Aurora recently uplisted to the New York Stock Exchange, boosting both the liquidity of its shares and its fundraising capacity. So far, this move hasn't been kind to Aurora's stock, with the company's shares losing 18% of their value since moving to the NYSE on Oct. 23. Longer term, though, this transition to a major American exchange should help to legitimize the company in the eyes of Wall Street and give it ready access to much-needed capital.  

The verdict

Although Aurora dwarfs OrganiGram in terms of both market cap ($6.01 billion vs. $533 million) and production capacity, OrganiGram might be the better buy for aggressive-minded growth investors. The two key issues are that OrganiGram has already slashed its production costs and its products are garnering numerous awards.

Therefore, OrganiGram seems to be building out a strong line of brands that could help it stave off the headwinds emanating from the upcoming supply glut in Canada. Aurora, on the other hand, comes across more as a pure volume play, which may not work out well once cannabis prices come under heavy pressure from oversupply in the next year. 

George Budwell has no position in any of the stocks mentioned. The Motley Fool recommends OrganiGram Holdings. The Motley Fool has a disclosure policy.