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The way stocks made those gains was very different, though. The Aurora share price doubled in mid-March before falling back a bit on earth. The Scotts, meanwhile, grew relatively regularly throughout the year.
Which action is the best choice for long-term investors? Here are the main arguments for Aurora and Scotts Miracle-Gro.
Giant cannabis leaf in a basket
Source of the image: Getty Images.
The Aurora Cannabis Case
Any discussion of the benefits of investing in Aurora Cannabis must include the ability of the company, leader in its sector. Aurora can currently produce approximately 150,000 kilograms of cannabis on an annual basis. It plans to increase the annual production capacity to more than 625,000 kilograms by the end of 2020.
The huge production capacity of Aurora is important for two main reasons. First, the company can sell everything it produces right now. The larger the offer, the more money it brings back. Second, Aurora's strong capacity through its advanced growth facilities provides the company with economies of scale that enable it to reduce costs and improve margins.
<p class = "canvas-atom-text-canvas Mb (1.0em) Mb (0) – sm Mt (0.8em) – sm" type = "text" content = "Aurora has many opportunities to sell cannabis that society boasts the second largest market share in the Canadian market for recreational cannabis, and is a major player in Canada's medical cannabis market. ranks as a leader in the international medical cannabis markets, the most important being Germany, where the company holds the largest market share. "data-reactid =" 29 "> Aurora has many opportunities to sell the cannabis that it produces, with the company claiming the second largest market share.In the Canadian market for recreational cannabis, it is a major player in the Canadian market for medical cannabis and Aurora ranks as the leader in international markets for medical cannabis, the largest of which is Germany, where it holds the largest market share.
The company is well positioned to serve the rapidly growing world market for hemp. The acquisitions of HempCo, AgroPro, Borela and ICC Labs by Aurora give it unprecedented scope for production and processing of hemp products.
<p class = "web-atom canvas-text Mb (1.0em) Mb (0) – sm Mt (0.8em) – sm" type = "text" content = "While some of his peers have chosen to sell a lot In As a challenge for major partners outside the cannabis industry, Aurora has taken a different path. the billionaire investor Nelson Peltz as a strategic advisor to facilitate the development of partnerships with many companies in a variety of sectors, including beverages and consumer products, with the aim of not creating large equity positions. This could pay off in the long term for Aurora as the global cannabis industry develops. "Data-reactid =" 31 "> While some of his peers have chosen to sell significant stakes to large partners outside of the cannabis industry, Aurora's billion-dollar investor Nelson Peltz has been chosen as strategic advisor to facilitate partnerships with many businesses in a variety of sectors, including consumer staples and beverages, with the goal of not creating large capital, which could be profitable in the long term for Aurora. the global cannabis industry is growing.
Speaking of the global cannabis industry, Aurora believes the total potential market could exceed $ 200 billion a year in the long run. Most of this opportunity lies outside Canada.
The Scotts Miracle-Gro affair
Scotts Miracle-Gro decided a few years ago to become the leading supplier of key products needed in the cannabis industry, including hydroponics, lighting systems and ventilation systems. This goal has been achieved through a series of acquisitions that have significantly increased the size of the Hawthorne Gardening subsidiary of the company.
Hawthorne occupies a large part of its business in California. This is not surprising since the state boasts the largest legal marijuana market in the world. But Hawthorne could have new opportunities that are bigger together than California.
<p class = "web-atom canvas-text Mb (1.0em) Mb (0) – sm Mt (0.8em) – sm" type = "text" content = "Illinois recently legalized recreational pot Market opening is scheduled for 2020. Efforts to legalize the recreational use of marijuana in New York and New Jersey have come up against obstacles, but the two major states could progress in the future not too far away. "data-reactid =" 36 "> Illinois recently legalized the recreational pot and market opening is planned for 2020. Efforts to legalize recreational marijuana use in New York and New Jersey have faced with obstacles, but the two big states could progress in the not too distant future.
<p class = "web-atom canvas-text Mb (1.0em) Mb (0) – sm Mt (0.8em) – sm" type = "text" content = "The market for the lawn and the garden intended for consumers is more mature The cannabis market is naturally synonymous with growth opportunity, but Scotts continues to innovate by launching new products, including organic products that have a positive impact on customers. & nbsp; Scotts CEO, Scott Hagedorn noted in the Q1 conference call from the company data-reactid = "42"> The market for turf and garden consumption is more mature than cannabis, which is understandable. However, Scotts continues to innovate by launching new products, including organic products that have a positive impact on customers. Scotts CEO Scott Hagedorn said during the first quarter conference call that the company was the main driver of growth for his lawn fertilizer. the business was "products that did not even exist three years ago".
In addition to these growth opportunities, Scotts Miracle-Gro offers investors a solid dividend that currently yields close to 2.5%. Do not reject the benefits offered by the company's dividend program. Over the past five years, Scotts' dividends have improved total returns by more than 50%.
Better buy
Returning to our original question: Which of these two values is the best choice for long-term investors? I think the answer depends on your investment style.
If you are a conservative investor, Scotts Miracle-Gro is the best choice. The Company has stable and growing operations in its core segment of lawns and general gardens. Hawthorne's position in the cannabis industry offers a faster growth opportunity. And Scotts has that nice dividend.
For more aggressive investors, however, Aurora Cannabis may be right for you. If global cannabis markets grow to a level close to what many people think, Aurora could generate huge gains.
Aurora is riskier than Scotts Miracle-Gro because it is a purely professional investment in the cannabis industry. It is also possible that Aurora may issue more shares in order to raise capital and dilute the value of existing shares. But if you have a long-term perspective, Aurora Cannabis may be one of the big winners of the marijuana boom.
<p class = "canvas-atom canvas-text Mb (1.0em) Mb (0) – sm Mt (0.8em) – sm" type = "text" content = " More from The Motley Fool "data-reactid =" 49 "> More from The Motley Fool
<p class = "canvas-atom canvas-text Mb (1.0em) Mb (0) – sm Mt (0.8em) – sm" type = "text" content = "Keith Speights has no position in any of the actions mentioned. The Motley Fool has no position in the mentioned actions. The Motley Fool has a disclosure policy."data-reactid =" 54 ">Keith Speights does not own any of the shares mentioned. The Motley Fool has no position in the mentioned actions. Motley Fool has a disclosure policy.
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