Canopy Growth (TSX:WEED) Reports Huge Losses: Is Aurora (TSX:ACB) a Better Buy?

Canopy Growth Corp. (TSX:WEED)(NYSE:CGC) and Aurora Cannabis Inc. (TSX:ACB)(NYSE:ACB) are the top players in Canada’s blossoming marijuana industry. Which one should you choose?

Powder of Cannabis (Drugs), Analysis of Cannabis in laboratory.

Image source: Getty Images

You’re reading a free article with opinions that may differ from The Motley Fool’s premium investing services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn moresdf

On June 21, the share price of Canopy Growth (TSX:WEED)(NYSE:CGC) skidded more than 8% on both the TSX and NYSE after the company presented fiscal fourth-quarter results the day before. The steeper losses impacted other weed stocks, including Aurora Cannabis (TSX:ACB)(NYSE:ACB), whose share price dropped by 1.8% on both exchanges.

Despite the unsettling news, you can sense the cautious optimism among investors. Analysts are undeterred, citing Canopy Growth’s long-term potential. The market is expected to grow bigger in time. But Aurora Cannabis can’t be left out of the picture. Which of them is a smarter buy right now?

Disappointing quarterly earnings

No one really expected Canopy Growth to produce bottom-line progress with the way it is investing heavily. Ramping up production is still the main focus. The immediate goal is to eliminate the supply shortages by doubling the volume of harvest in order to meet demand.

But the broadening losses will make any investor think twice about investing. It is hard to reconcile investing in an industry leader whose losses continue to outpace sales. CEO Bruce Linton appeared stoic and came prepared with an alibi to defend the staggering $577 million operating losses for the year.

According to Linton, the year was a historic one. Canopy Growth has taken major steps to build the company’s national platform while scaling the processes to bring cannabis to market. His answer was acceptable enough to assure investors.

Prior to the earnings letdown, shareholders of both Canopy Growth and Acreage Holdings shareholders overwhelmingly approved a landmark pot deal. Canopy Growth would acquire the American vertically integrated, multi-state cannabis operator for $3.4 billion if and when cannabis becomes permissible at the federal level.

Linton reiterated that the completion of the transaction is intended for Canopy Growth to efficiently and effectively establish a footprint in the U.S. cannabis market once federal approval is obtained. They are dead set on becoming the global cannabis leader now that the domestic and international marketing strategies are under way.

No second fiddle

Aurora Cannabis will not be content as the low man on the totem pole. The company with the largest production capacity is also eyeing market leadership. However, it needs to land or team up with a moneyed partner the way Canopy Growth did.

There’s also the need to move into the lucrative U.S. hemp CBD market. Just like Canopy Growth, Aurora Cannabis is waiting in the wings for the legalization of pot in the U.S. But the company hasn’t given any clue on upcoming strategic moves. Growth hinges on major catalysts that would propel the stock.

The choice

Canopy Growth has laid down the cards for all to see. There are clear strategies to achieve market leadership and global dominance in an industry that is projected to be worth US$250 billion to US$500 billion in the coming years.

Canopy Growth and Aurora Cannabis have great potential. However, I wouldn’t risk investing in both and losing double. I’m inclined to believe more in Canopy’s potential to be rewarded big time in the long term.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium service or advisor. 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, so we sometimes publish articles that may not be in line with recommendations, rankings or other content.

Fool contributor Adam Othman has no position in the companies mentioned.

More on Cannabis Stocks

Cannabis smoke
Cannabis Stocks

Canopy Growth Stock: Is Now a Good Time to Invest?

The road ahead is highly uncertain for Canopy Growth, as the stock is plagued with losses and seemingly unsurmountable industry…

Read more »

Cannabis grows at a commercial farm.
Cannabis Stocks

TLRY Stock: Should You Invest Now?

TLRY is a Canadian cannabis stock which is trading 91% below record highs. Let's see if you should own TLRY…

Read more »

Cannabis grows at a commercial farm.
Cannabis Stocks

Is Tilray Stock a Buy in February 2023?

Despite the volatile cannabis sector, Tilray could be a superb buy for long-term investors.

Read more »

Young woman sat at laptop by a window
Cannabis Stocks

Is SNDL Stock a Buy in February 2023?

SNDL is a beaten-down cannabis stock. While its revenue growth is exceptional, a weak balance sheet has driven stock prices…

Read more »

A cannabis plant grows.
Cannabis Stocks

TLRY Stock: Here’s What’s Coming in 2023

Tilray Inc. (TSX:TLRY) is geared up for big growth this decade and looks like one of the top cannabis stocks…

Read more »

A person holds a small glass jar of marijuana.
Cannabis Stocks

Canopy Growth Stock: Here’s What’s Coming in 2023

Canopy Growth stock has made a lot of new moves in the last few months, but where is the company…

Read more »

A cannabis plant grows.
Cannabis Stocks

Better Cannabis Buy: Canopy Growth Stock or Tilray?

Only two TSX weed stocks can deliver substantial returns in the highly anticipated growth of the global cannabis market.

Read more »

Medicinal research is conducted on cannabis.
Cannabis Stocks

Is Tilray Stock a Buy in January 2023?

Tilray stock has lost 50% of its value in the last 12 months, in line with its peers.

Read more »