Aurora vs. Canopy: Which Is the Better Stock as Canada Marijuana Market Blooms?

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Aurora vs. Canopy Stock

One of the most compelling competitions between companies involves the marijuana industry’s two heaviest hitters: Canopy Growth Corp (NYSE:CGC) and Aurora Cannabis Inc (OTCMKTS:ACBFF, TSE:ACB).

In the battle of Aurora vs. Canopy stock, which one will reign supreme? Let’s dive in.

The two companies currently top the legal cannabis industry in terms of market cap, with Canopy Growth holding about $6.0 billion and Aurora coming in at $3.6 billion. Their respective positions as top players in the  industry are spurring on the talk about competition and conflict.

For a long time, Canopy Growth has remained the dominant player in the legal marijuana industry, and that has been largely unchallenged—until now.

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Aurora’s acquisitions have placed the company firmly on the heels of Canopy Growth. In fact, its most recent deal to acquire MedReleaf Corp (OTCMKTS:MEDFF, TSE:LEAF) will likely push Aurora above Canopy Growth in terms of market cap (MedReleaf has a market cap of about $2.3 billion).

Aurora’s acquisition of MedReleaf is the largest deal in the marijuana industry to date, and it reflects just how massive these companies have become, undertaking billion-dollar acquisitions with increasing frequency.

But the battle isn’t only being fought on the market cap front; the Aurora acquisitions are positioning the company to have the highest marijuana supply capacity in the industry.

With Canadian marijuana legalization on the way and the demand expected to be high, Aurora will be perfectly situated to become one of the top suppliers to the country. The company has an immense new network that it has cultivated over the year through expansions and acquisitions.

Chart courtesy of StockCharts.com

Both companies are already very active in the medical marijuana market, but both are chomping at the bit for when recreational marijuana legalization lands in Canada and a whole new market opens.

Of course, while all of these are positive notes for both companies, the battle between Aurora and Canopy stock is not without its question marks.

For instance, in an industry widely derided by naysayers as being overvalued, these two companies enjoy some of the highest stock valuations around.

As such, there is some concern that the companies may be more hype than substance. We’re seeing this play out time and time again on the marijuana stock market, with its various ebbs and flows.

So, with the stage set for an Aurora vs. Canopy stock showdown, let’s take a deeper look at each company’s individual plays so far in 2018.

Canopy Stock Forecast

I’ve been bullish in my Canopy stock forecast for some time, and it has not led my readers astray.

The stock price is up about 17% since the beginning of this year, and that figure is all the more impressive, considering how dismally 2018 began after the bull rush of late 2017 dissipated.

So why am I so keen on the Canopy stock forecast? The first reason is the company’s global reach.

It has expanded into German, Australian, and most recently South American markets.

We saw the company expand its global reach with the creation of a new medical marijuana subsidiary, Canopy LATAM Corp.

The deal, valued at about $150.0 million, marks one of the biggest plays by the company in 2018.

“This isn’t a strategy about more growing that we’ll try to send back to Canada or something like that,” said Mark Zekulin, president and co-CEO of Canopy Growth. “This is about building a Latin American market.” (Source: “previous deal with Constellation Brands, Inc. (NYSE:STZ), a major U.S. liquor company. The deal was valued at CA$245.0 million and contained hints that the two were working on cannabis beverages.

This big alcohol partnership may be exactly what Canopy needs to not only ward off the threat of Aurora, but emerge as the undisputed winner in the Aurora vs. Canopy stock battle.

Aurora Stock Forecast

My relationship with Aurora stock, however, is a little more fraught.

Back when I first began writing about marijuana two years ago, Aurora was one of my favorites. Readers of mine would have done well to heed my advice, as the company has enjoyed triple-digit gains in that time.

But, as of late, making an Aurora stock forecast has been harder for a variety of reasons.

The first is that the company’s acquisitions—while impressive—have failed to yield sustainable gains on the stock market.

The Aurora stock price is down about 18% on the year, putting it well below the success of Canopy stock in 2018.

Furthermore, the company’s aggressiveness in 2018 has turned off some investors, who think that Aurora is trying to do too much too soon. That’s a fair criticism and one worth evaluating as you decide between these two heavyweights.

Aurora has, much like its rival, expanded its global reach and increased its licensing agreements across Canada, but it has yet to have a breakout moment in 2018.

That said, I believe that the Aurora stock forecast is bright; it’s simply more volatile than that of Canopy Growth.

Aurora vs. Canopy Growth: Which Is the Better Stock?

There’s a strong argument to be made for either stock, really.

But if you can only choose one, I’d argue that Canopy Growth stock is the better one.

Canopy Growth’s plan is more stable and precise, whereas Aurora is swinging for the fences. That could work out in Aurora’s favor down the line, but, for marijuana bulls looking for a long-term investment with minimal (relatively speaking) risk, Canopy Growth could be the better choice.

Analyst Take

Both Aurora and Canopy stocks have a lot to offer, but one is the safer pick, and that’s Canopy Growth.

Considering that the legal cannabis industry is already fraught with volatility, having an acquisition-prone giant like Aurora running around gobbling up companies adds another layer of risk that—while potentially yielding a huge reward—makes it harder to recommend, at least when comparing the two.