Aphria (NASDAQ:APHA) and Sundial Growers (NASDAQ:SNDL) rank as two of the most talked-about cannabis stocks around right now. They're also two of the hottest cannabis stocks. Aphria's shares have jumped more than 160% year to date while Sundial stock has soared more than 170%. 

But generating a lot of buzz and past gains don't necessarily mean that a stock will be successful going forward. Which of these two cannabis stocks is the better pick now? Here's how Aphria and Sundial stack up against each other.

Cannabis leaf on top of a $100 bill partially covering Ben Franklin's face

Image source: Getty Images.

The case for Aphria

If you prefer to go big or go home, Aphria could be just the stock you're looking for. It's set to become the biggest cannabis producer in the world soon with a merger with Tilray (NASDAQ:TLRY).

The combination of Aphria and Tilray should give the resulting entity a No. 1 market share in the Canadian retail cannabis market. The addition of Tilray's Portugal operations with Aphria's CC Pharma distribution business will also boost the company's position in the expanding European medical cannabis market.

Of course, the biggest prize of all is the U.S. market. Aphria now has its foot in the door in that market thanks to its acquisition in November of SweetWater Brewing. The Atlanta-based craft brewer has built a lineup of brands closely aligned with the cannabis lifestyle, including its flagship 420 Extra Pale Ale brand. The merger with Tilray will bring leading hemp foods maker Manitoba Harvest into the fold.

The combined company will assume the Tilray name once the transaction closes, which is expected to happen in the second quarter. However, Aphria is definitely the controlling player in the deal. Current Aphria chairman and CEO Irwin Simon will retain those roles in the new company. Aphria will also hold seven of the nine seats on the board of directors.

In the meantime, Aphria's financial position looks better than most other Canadian cannabis companies. Aphria reported year-over-year revenue growth of 33% in its latest quarter. It also generated higher positive adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) for the seventh consecutive quarter.

The case for Sundial Growers

It might seem like nearly everyone is talking about Sundial Growers these days. Reddit and Robinhood users have helped drive impressive gains for the small Canadian marijuana stock over the last couple of months. 

Sundial operates a 470,000-square-foot cannabis facility in Alberta. It markets four adult-use cannabis brands that target all price-points from value to premium. The company claims a nationwide market share of around 3.3%. Sundial is strongest in the province of Quebec, where its market share tops 4%. 

The company struggled somewhat in 2020. Sundial's net cannabis revenue fell 36% in the third quarter from the previous quarter. It also posted a hefty net loss and worsening negative adjusted EBITDA.

However, there is some good news on the financial front for Sundial. In December, the company completed a restructuring that completely wiped out its debt. And unlike some Reddit-fueled high-flyers, Sundial took advantage of its tremendous gains by issuing new shares to raise additional cash. 

Sundial appears to have resolved some issues with its cultivation processes that weighed on its Q3 performance. It's also transitioning more to branded products from selling wholesale. As the Canadian cannabis market grows, Sundial could see its financial position improve significantly.

Better cannabis stock?

I think the choice between these two cannabis stocks is an easy one. Aphria is the clear winner. Its financial position is stronger. It's growing faster. And it will soon become the top cannabis company in the world. 

However, I'm not really a fan of either of these stocks right now. Why? There are several other cannabis stocks that have even better growth prospects.

In particular, I like some U.S.-based cannabis companies. The stocks are generally more attractively valued than their Canadian peers. And with more states legalizing marijuana, their opportunities are expanding. Aphria beats Sundial, in my view, but there are a handful of U.S. pot stocks that beat Aphria.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium advisory service. We’re motley! Questioning an investing thesis -- even one of our own -- helps us all think critically about investing and make decisions that help us become smarter, happier, and richer.