Tilray Stock vs. Canopy Growth Stock: Which Is the Better Long-Term Pot Stock?

TLRY Stock & CGC Stock Battle It Out for Top Spot in Marijuana Sector

For a long, long time, Canopy Growth Corp (NYSE:CGC) was the unimpeachable head of the marijuana industry. Whether you used market cap, notoriety, or production capacity as your metric, Canopy Growth stock was hard to top. But now, its rivals are proliferating. One significant rival is Tilray Inc (NASDAQ:TLRY).

But does Tilray stock have what it takes to dethrone Canopy Growth?

The answer to that question is yes. But if your question is whether TLRY stock is a better long-term opportunity than CGC stock, the answer is a little more complicated.

You see, Tilray stock has had a recent explosion in value (and attention) after the company’s merger with Aphria Inc.

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Aphria stock had been a long-time focus of mine, appearing regularly in my articles. Aphria had a checkered history, with many ups and downs, but ultimately, it was a major player in the Canadian marijuana market.

Chart courtesy of StockCharts.com

Aphria Inc’s merger with Tilray Inc has created a powerhouse in the marijuana market. The excitement around Tilray stock at the time of the merger sent its share price soaring by more than 650%.

But, as with all things driven by an immense rush of hype, the gains turned out to be fleeting, with a good chunk of those gains being given back in short order. Still, even with the correction, TLRY stock has gained about 100% on the year.

Let’s compare that to Canopy Growth stock’s performance so far in 2021.

It’s worth noting that Canopy Growth has had nothing as momentous as a major merger with a large rival to help spur share gains. As a result, CGC stock has had an uneven performance in 2021 after rallying in late 2020, with a loss of about seven percent on the year so far.

That isn’t to say Canopy Growth Corp has made no recent business moves. In June, the company acquired Supreme Cannabis Company Inc. (Source: “Canopy Growth Completes Acquisition of Supreme,” Canopy Growth Corp., June 23, 2021.)

With that acquisition, it looks like Canopy Growth will somewhat solidify its position on top of the marijuana market, but that position is getting more and more vulnerable.

When we compare financials, Canopy Growth Corp comes out cleanly ahead of Tilray Inc, with about $438.3 million in revenue for fiscal year 2020. Meanwhile, Tilray only registered about $210.5 in revenue for the year. (Source: “Canopy Growth Reports Fourth Quarter and Fiscal Year 2021 Financial Results,” Canopy Growth Corp., June 1, 2021.)

Growth-wise, Canopy Growth Corp also topped Tilray Inc, with a 37% gain in revenue compared to the previous year. In the same period, Tilray only netted a 26% gain. (Source: “Tilray, Inc. Reports 2020 Full Fiscal Year and Fourth Quarter Results,” Tilray Inc, February 17, 2021.)

Of course, the addition of roughly CA$150.0 million per quarter that Aphria Inc will bring to Tilray Inc (based on Aphria’s latest quarterly report) could shift the balance. (Source: “Aphria Inc. Announces Third Quarter Fiscal Year 2021 Results,” Cision, April 12, 2021.)

Supreme Cannabis, by contrast, only brings in about CA$18.3 million, according to its latest quarterly report. (Source: “Supreme Cannabis Announces Financial Results for Q2 2021,” Supreme Cannabis Company Inc, February 11, 2021.)

So the future looks like it’s tipping in favor of Tilray Inc, at least in terms of revenue and size.

And one thing I’ve criticized Canopy Growth Corp for is its less-ambitious attitude since jettisoning Bruce Linton, its former CEO.

I understand that the company wants to post larger profits now, but the legal marijuana industry is still in its nascent stage, during which a few key investments now could lead to decades of dominance down the line. Being myopic at a time like this could cripple a business’s potential.

So, if I had to choose which of the two pot stocks is more likely to see larger gains down the line, I’d have to guess TLRY stock—with two caveats.

The first caveat is that Tilray stock is a little overheated right now. Between the massive hype and the huge fluctuations in price in 2021, it’s a very volatile stock.

The second caveat is that Tilray Inc has traditionally played on hype—like when it was the first pot stock to have an initial public offering (IPO) on a major U.S. exchange—and has failed to follow the hype with concrete wins.

We’ll see if history repeats, but there’s reason to be skeptical of TLRY stock.

Canopy Growth Corp, on the other hand, has a track record of being reliable. While I view Tilray Inc as having more potential for gains, that potential is somewhat tempered by the possibility of swift dips in value.

In contrast, I anticipate that Canopy Growth stock will make a slow, steady climb. I have full confidence that the stock will at least double in value and regain its former highs by the end of 2023 (if the economy continues to recover).

So if you’re looking for higher gains, I’d say Tilray stock is the way to go. But if you’re looking for something a little safer and want to have a consistent, long-term buy-and-hold pot stock in your portfolio, I believe Canopy Growth stock is the superior option.

Analyst Take

The marijuana market isn’t a zero-sum game; there’s plenty of room for many pot stocks to see tremendous gains in the next few months and years.

But if you want to know which of the heavy-hitters is best positioned to see the biggest gains in the coming years, I’d say TLRY stock has more potential than CGC stock, but with that potential comes more volatility. For investors who can stomach the volatility and are looking to maximize gains at the expense of safety, Tilray Inc is a solid option.

Canopy Growth Corp, on the other hand, is the more stable choice, even while it has the potential to at least double its share price in the next few years.