You won't have any problems finding reasons to be interested in investing in the booming cannabis industry. But deciding which marijuana stock or stocks are the best picks might not be so easy.
Two stocks you should consider are Aurora Cannabis (NYSE:ACB) and CannTrust Holdings (NYSE:CTST). Which of these two Canadian cannabis producers has stronger long-term prospects? Here's how Aurora and CannTrust compare.
The case for Aurora Cannabis
Everyone knows the global marijuana opportunity is huge, even if they don't agree on just how huge it actually is or will be down the road. One thing isn't disputed, though: A company can only sell what it can produce. And that's an area in which Aurora Cannabis has a big advantage over most of its peers.
Thanks to a dizzying string of acquisitions, Aurora Cannabis is on track to claim the highest production capacity in the entire cannabis industry. Right now, Aurora can produce around 70,000 kilograms of cannabis per year. But by early 2019, that total should more than double to 150,000. By mid-2020, the company thinks that it will produce upward of 500,000 kilograms annually.
But Aurora isn't just about size -- its reach is pretty impressive, too. The company was a latecomer of sorts to the Canadian medical marijuana space. However, Aurora became a big player in the market with a rapidly growing number of patients using its products.
Aurora also quickly became a top performer in the Canadian recreational marijuana market that opened for business in October 2018. In the first few weeks of the recreational market's launch, Aurora claimed the top four best-selling products in British Columbia and a leading market share of more than 30% in Ontario.
The company jumped on international opportunities early on as well. Aurora's acquisition of Pedanios gave it a first-mover advantage in the enormously important German medical marijuana market. The company received the first import license in Poland for medical cannabis and was the first to export medical cannabis to Denmark and Malta. Aurora's acquisitions of MED Colombia and ICC Labs also give the company a significant presence in Latin America.
The case for CannTrust Holdings
Sure, CannTrust Holdings is a lot smaller than Aurora Cannabis in terms of market cap. But CannTrust holds its own in the key areas that are prerequisites for success in the cannabis industry.
The company ranks among the top 10 largest marijuana producers for projected annual production capacity. CannTrust expects to have an annual capacity of 50,000 kilograms in early 2019, with plans of increasing that level to 100,000 kilograms by the end of next year.
CannTrust reported 50,000 active patients using its medical cannabis products in Canada in Q3, up 61% year over year. It is in a good position to capitalize on growth in the country's recreational marijuana market as well, with supply agreements in place with nine Canadian provinces.
The company won't go it alone in the Canadian recreational market. Breakthru Beverage Group, the largest Canadian alcohol beverage broker, is CannTrust's exclusive sales partner for recreational marijuana products in Canada.
CannTrust hasn't only focused on the opportunities at home. The company is the only cannabis producer to ship cannabis oils to Denmark so far. It has a joint venture with Stenocare to serve the medical cannabis market in Denmark. CannTrust has a strategic partnership with CannaTrek in Australia as well as partnerships in Germany and the Netherlands. All of these relationships are in addition to CannTrust's exclusive partnership with Apotex, Canada's largest generic drug maker, to develop alternate dosage formats for medical cannabis products globally.
And CannTrust is going to the dogs. The company entered the veterinary cannabis market by partnering with Grey Wolf Animal Health. The two partners are developing medical cannabis products for pets.
Better marijuana stock
Both Aurora Cannabis and CannTrust should have what it takes to succeed over the long run. If I could only choose one of these stocks right now, though, it would be CannTrust. Why?
CannTrust is at least generating a nominal profit, something Aurora isn't doing at this point. CannTrust also intends to list on the New York Stock Exchange in the near future, a move that could generate more interest among U.S. investors in the stock. (Aurora has already enjoyed its bump from listing on the NYSE.) In addition, I think CannTrust's valuation appears to be more attractive than Aurora's does.
Aurora Cannabis should be a big winner in the future, but CannTrust gets the nod for now.