Last year was a bummer for shareholders of both Aphria (NYSE:APHA) and Constellation Brands (NYSE:STZ). Despite the long-awaited opening of the Canadian recreational-marijuana market, Aphria stock plunged more than 60%. And despite a much-heralded big investment in Canopy Growth (NYSE:CGC), Constellation's share price fell nearly 30%.

So far, 2019 has been more favorable for both companies. Aphria is hotter than Constellation is right now. But which of these two stocks is the better pick for long-term investors?

Overhead view of a glass filled with a beverage and a marijuana leaf with part of a marijuana plant next to the glass

Image source: Getty Images.

The case for Aphria

Let's first address why Aphria performed so horribly in 2018. The chief reason was that short-sellers alleged that Aphria drastically overpaid for its acquisition of Latin American cannabis businesses and did so in a way that profited key Aphria insiders. Aphria denied the allegations, but the damage was already done to its stock price.

Aphria has rebounded significantly, though, thanks primarily to a hostile takeover attempt by U.S.-based Green Growth Brands. Although Aphria's board turned its nose up at Green Growth's offer, the proposed acquisition rekindled investors' interest in Aphria. And there are certainly reasons for investors to take a hard look at the stock.

For one thing, Aphria ranks highly in the industry in terms of production capacity. The company thinks it will have an annual production capacity of 255,000 kilograms by the end of this year. With fast-growing markets in Canada and around the world, Aphria should be able to sell all it can produce. 

These fast-growing marijuana markets are attracting a lot of attention from major companies outside the cannabis industry. Constellation Brands is one of three big alcoholic-beverage companies that have struck deals with Canadian marijuana growers. Tobacco giant Altria is making a significant investment in Cronos Group. It's quite possible, perhaps even probable, that Aphria will land a big partner as well in the not-too-distant future. 

You probably can't refer to Aphria as a bargain stock and keep a straight face. However, shares currently trade at a discount to several of its peers, especially factoring in the respective production capacities of each company. If the global marijuana market reaches anywhere close to some observers' estimates, Aphria wouldn't have to claim a very large market share to be worth a lot more than it is today.

The case for Constellation Brands

You can look at investing in Constellation Brands from two different angles. One is to see Constellation as an alcoholic-beverage stock. The other is to view Constellation as a marijuana stock.

The company makes nearly all of its money today from alcoholic beverages. Constellation's beers, including Corona and Modelo, are "on fire," to use the words from CEO Rob Sands in the company's Q3 earnings report. While rival beer makers are struggling somewhat, Constellation's premium beers are dominating the U.S. market in terms of sales growth. 

However, Constellation's wine and spirits business is another story. Sales growth has been lackluster. The good news, though, is that the company has launched several new products that could jump-start growth.

But the bigger attraction for Constellation could be as a marijuana stock. Constellation dipped its toes in the cannabis waters in 2017, when it bought a 9.9% stake in Canopy Growth. The company dove in headfirst last year, though, by pouring another $4 billion into Canopy to boost its ownership interest to around 38%, with an option to gain majority control in the future.

Constellation's management thinks the global marijuana market could top $230 billion within the next 15 years and believes Canopy could capture up to 15% of the market. If these projections turn out to be accurate, Constellation's cannabis business could be worth several times more than the entire company is worth today.

Better buy

If you had to buy one of these stocks now and sell it at the end of the year, I suspect Aphria would be the better pick. The completion of a review by a special committee consisting of independent board members about the Latin American acquisition allegations could help Aphria move from beneath the dark cloud that's been hovering over it.

Of course, you don't have to sell either stock at the end of 2019. Over the long run, I think Constellation will be the bigger winner.

My view is that the company will continue to win in the premium-beer market. I think Constellation will either fix its wine and spirits business or sell it. More importantly, I expect the company's big bet on Canopy Growth to pay off.

Aphria is a pretty good marijuana stock to buy, in my opinion. But I think Constellation Brands is an even better one for long-term investors.