CGC vs. TLRY: Will Canopy or Tilray Be the Top Marijuana Stock?

Top marijuana stock
iStock.com/Michael Nosek

CGC Stock vs. TLRY Stock

When it comes to the top marijuana stocks, there are only a few names that belong in the conversation.

Canopy Growth Corp (NYSE:CGC) and Tilray Inc (NASDAQ:TLRY), being among the largest companies by market cap, are naturally included in the discussion. But when it comes to CGC stock vs. TLRY stock, the numbers appear to imply that there’s a clear winner.

Chart courtesy of StockCharts.com

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First, a bit of backstory on how these two marijuana stocks have been jockeying for the top spot ever since TLRY stock made its loud and proud entrance onto the scene last year.

When Tilray Inc became the first ever marijuana initial public offering (IPO) to hit a major U.S. exchange, investors were rightfully excited. This was a huge leap forward for pot stocks, as they gained both legitimacy and the attention of investors who had, perhaps up to that point, been ignoring the massive gains made by pot stocks for years.

With the TLRY IPO, the stock shot up instantly, quickly gaining as much as 1,000% within a month. It also seized the top spot in the industry by market cap—for a time.

I’ll admit, I didn’t think that the astronomical gains would last; I predicted an immediate pullback on the company’s share prices following its initial rush. But the stock kept rising for several weeks after, making it seem as if I had called it all wrong.

It turns out my call was correct, but the timeline was off. Tilray stock has experienced a massive drop in value since that peak in the summer of 2018.

With that fall, TLRY stock gave the title of top market share back to Canopy Growth. Now CGC stock’s market share more than doubles that of Tilray.

While many investors are still bullish on Tilray (at times it seemed as if the company was more than just a buzzworthy IPO), ultimately the stock has come up short time and time again ever since going public.

As for why, let’s examine each stock.

Canopy Growth Stock

Canopy Growth Corp has made almost no mistakes to start the year. Quite the contrary, in fact: the company has been hugely successful in 2019.

Canopy Growth was quick to announce that it would seek to enter the U.S. cannabis market following the passing of the Agriculture Improvement Act of 2018, which legalized the cultivation of hemp—and through it, cannabidiol (CBD).

The U.S. CBD market, as you would expect, is highly coveted by marijuana companies, and Canopy Growth is laser-focused on entering it.

The company then had several banks declare it a winner for a variety of reasons, showing that Canopy Growth now had institutional support.

Its latest quarterly report did not disappoint. Revenue skyrocketed by 282% in the quarter, climbing to CA$83.0 million, up from CA$21.7 million in the same quarter in the previous year. (Source: “Canopy Growth Corporation Reports Third Quarter Fiscal 2019 Financial Results: Gross Sales of $98M; Net Revenue hits record $83M,” Canopy Growth Corp, February 14, 2019.)

This massive jump in revenue was helped along by a huge increase in sales that followed Canadian recreational marijuana legalization. The company sold over 20,000 pounds of cannabis in the quarter, a 334% increase from Q3 2018.

Canopy Growth Corp also scored a major win with its intention to open a licensed retail location in London, Ontario in April 2019.

Even better, Canopy Growth partnered with Alimentation Couche-Tard Inc (OTCMKTS:ANCTF, TSE:ATD) for the London deal. Alimentation Couche-Tard is a massive Canadian convenience store operator with locations in Canada, the U.S., and Europe. (Source: “Alimentation Couche-Tard and Canopy Growth to Support Cannabis Retail in London, Ontario,MarketWatch, February 21, 2019.)

This partnership has the potential to yield huge benefits.

Which is all to say that Canopy Growth stock is among the best positioned to see huge gains down the line, on top of the already impressive growth the company has experienced over the past few years. As such, I believe that CGC stock is the top marijuana stock.

Tilray Stock

While I wouldn’t say that 2019 has been a failure for Tilray Inc, taking just one look at the company’s stock chart versus that of Canopy Growth is enough to tell you that things have not gone well.

Tilray has been the beneficiary of some good news, namely its acquisition of FHF Holdings Ltd., the parent company of hemp food maker Manitoba Harvest. The company is looking to leverage its acquisition of Manitoba Harvest into an entrance into the U.S. cannabis market, much like Canopy Growth. (Source: “Tilray to buy hemp food maker Manitoba Harvest for $419M amid broader U.S. CBD push,” BNN Bloomberg, February 20, 2019.)

But Tilray’s wins in 2019 have been dwarfed by its competitors, and that disparity shows on the stock chart.

The company’s most recent quarterly report did little to help. While revenue for fiscal 2018 increased to $43.1 million, up 110% compared to the previous year, and it also doubled the amount of product sold, this did little to help motivate share growth. (Source: “Tilray, Inc. Reports Full Year 2018 Financial Results,” Tilray Inc, March 18, 2019.)

That was largely due to the big losses in the report. Net loss for the year came in at $67.7 million ($0.82 per share), compared to $7.8 million ($0.10 per share) for 2017. That’s a similarly massive increase, and one that has offset the goodwill from the high revenue numbers.

The loss was caused by increased operating costs, expansion, and funding its IPO. Whatever the reasons, investors were none too pleased to see such a high net loss.

Looking at the hard numbers and the foundational support of the two companies, it becomes clear that Tilray Inc is simply lagging behind its competitors, especially Canopy Growth Corp.

Analyst Take

When it comes to the top marijuana stock, Canopy Growth Corp has made many strong moves that will pay off both in the present and the future. In fact, I see Canopy being a strong stock for months, even years to come.

Tilray Inc, however, I’m not so sure about. It’s not a terrible stock by any means, but TLRY stock grew too quickly and without much foundational support for my liking, leading me to believe that tough times may still lie ahead for the company.

Of course, that’s not to say I recommend buying either stock. The numbers mentioned above are subject to change, and a savvy investor should always do their own due diligence before adding to their portfolio of top marijuana stocks.