Really bad and downright horrible. That's the best way to sum up the stock performances for OrganiGram Holdings (OGI -5.05%) and Aurora Cannabis (ACB -11.71%) over the pst 12 months. Shares of aOrganiGram are down more than 60% during the period, while Aurora stock has plunged more than 80%.

But better days could be in store for both of these Canadian cannabis producers. Which stock is the better pick for patient investors?

Shopping cart with a giant cannabis leaf in it

Image source: Getty Images.

The case for OrganiGram

You can find a lot to like about OrganiGram merely by looking at its fiscal 2020 first-quarter results announced in January. While many of its peers have provided disappointing quarterly updates, OrganiGram handily beat expectations.

The company's revenue continues to soar thanks to OrganiGram's strong presence in the Canadian adult-use recreational marijuana and medical cannabis markets. OrganiGram appears to have moved past issues with product returns related to lower-than-expected demand for THC oils last year.

Probably the biggest advantage that OrganiGram has over its peers right now is that it's already generating positive adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA). The company did have one blip in Q4 where its adjusted EBITDA was negative, but it's delivered positive numbers in other recent quarters. An important key behind OrganiGram's ability to achieve positive adjusted EBITDA is its low cultivation costs. 

OrganiGram isn't too far away from being profitable on a consistent basis. Its net loss in Q1 was only $0.9 million in Canadian dollars. The company's fiscal discipline combined with increasing revenue should put OrganiGram operating in the black far sooner than most of its rivals.

The company also has a couple of tailwinds that should fuel higher revenue. Ontario is starting to issue more licenses to retail cannabis stores. The Cannabis 2.0 cannabis derivatives market is slowly picking up steam. 

In addition, OrganGram's shares currently trade at less than six times trailing-12-month sales. That's cheap compared to most Canadian marijuana stocks

The case for Aurora Cannabis

Unfortunately, there wasn't a lot to like with Aurora Cannabis' latest quarterly update. However, there are reasons to be more optimistic about the company's future prospects.

For one thing, Aurora has taken steps to control its spending. The company is pushing back on finishing construction at two of its facilities, moves that will save roughly CA$190 million. It cut close to 500 positions. These actions will help shore up Aurora's bottom line. As part of a restructuring of its secured credit facilities, Aurora also is now committed to hitting positive EBITDA thresholds beginning in fiscal 2021 Q1. 

Aurora is also looking for a new CEO after founder and longtime CEO Terry Booth stepped down. Hiring the right person for the job could boost investors' confidence in the company.

Cantor Fitzgerald analyst Pablo Zuanic thinks that a strong new CEO combined with finding a partner from outside the cannabis industry could be huge catalysts for Aurora. The company could be making progress on the second item. Aurora recently added two new directors to its board, both of whom have great connections in the consumer packaged goods (CPG) industry.  

Meanwhile, Aurora has several competitive strengths. Like OrganiGram, the company claims a low cost structure that enables it to achieve solid gross margins. Aurora's production capacity ranks at the top of the industry.

The company retains the second-highest market share in the Canadian recreational marijuana market. It's also a leader in Germany's medical cannabis market.

Better buy

I favor looking at the long-term prospects for any industry and for any stock. My view is that the cannabis industry should continue to expand dramatically in the future despite the significant challenges. That bodes well for both OrganiGram and Aurora.

But we can't sweep current problems under the rug. The reality is that Aurora faces some big issues, primarily including its lack of profitability, major debt load, and dwindling cash stockpile. OrganiGram is in better shape in all of these areas. I think OrganiGram is hands-down the better stock right now.