Aurora Cannabis, Canopy Growth or Tilray? – The madman

There are different categories for Canadian marijuana stocks in terms of market capitalization. Most of these stocks have a market capitalization well below $ 1 billion. Some are between $ 1 billion and $ 5 billion. But only three companies declare ceilings greater than $ 5 billion: Aurora Cannabis (NYSE: ACB), Cover growth (NYSE: CGC), and Tilray (NASDAQ: TLRY).

Which of these large marijuana stocks is the best choice for investors? People looking to buy a diamond use the "four Cs" – size, color, sharpness and carat – with an additional cost equal to a fifth C. There are also five C's that investors can use to determine the best marijuana stock to buy: capacity, competitive position, connections, cash and cost. How do Aurora, Canopy Growth and Tilray compare in these categories?

Source of the image: Getty Images.

Capacity

Aurora Cannabis can currently produce about 70,000 kilograms of cannabis a year. By early 2019, the annual production capacity of the company will reach more than 150,000 kilograms. Aurora, however, is increasing its capacity and expects to be able to produce more than 500,000 kilograms per year in the near future. The acquisition by ICC of the Uruguayan company ICC Labs will further increase capacity.

Canopy Growth does not talk about its capacity in kilograms of cannabis produced per year. However, the company currently has more than 4.3 million square feet of licensed growing space. Its goal is to license a growing 5.6 million square feet of space. This should result in Canopy Growth's annual production capacity exceeding 500,000 kilograms per year.

Tilray is far from being close to Aurora and Canopy's growth in production capacity. The company is expected to have 912,000 square feet of space in growth by the end of 2018. However, Tilray still has many opportunities for expansion and could still rank among the top five marijuana growers in terms of production capacity from here a few years.

Advantage: Aurora Cannabis.

Competitive position

Canopy Growth has the highest total volume for supply agreements with the provinces and territories, with commitments totaling 70,000 kilograms, excluding Ontario. Aurora Cannabis, however, bragged a bit of its update of the first quarter of its 2019 fiscal year. The company said that until October 31, 2018, Aurora brands accounted for about 30% of the total market sourced through the site Web Ontario Cannabis Store, two of its brands listed among the top three selling leisure marijuana products.

Tilray had the right to boast about the global marijuana market for medical purposes. In September, he became the first marijuana producer to get approval to supply both cannabis flowers and cannabis oils to Germany.

However, Aurora Cannabis and Canopy Growth are expected to have good prospects in international marijuana markets for medical purposes, including Germany. And Tilray should behave very well in the Canadian marijuana market for recreational purposes. The three companies seem to be well positioned to compete at home and around the world.

Benefit: Undetermined.

Connections

Tilray announced a partnership earlier this year with Sandoz Canada, a subsidiary of Novartis. The two companies jointly develop and market medical cannabis products. Aurora Cannabis would have had discussions with several potential partners outside the cannabis industry, although no agreement has yet materialized.

Canopy Growth, meanwhile, has signed the largest partnership contract in the history of the cannabis industry. Fortune 500 Alcoholic Beverage Company Constellation Brands (NYSE: STZ) bought a 9.9% stake in Canopy last year. Constellation significantly increased its bet in August 2018 with a $ 4 billion investment in Canopy, bringing its stake to 38%.

Advantage: Growth of the canopy.

Cash

Money is important for each of these marijuana growers for several reasons. None of them is still profitable at the moment. They all need capital to continue their expansion. And while Aurora Cannabis, Canopy Growth and Tilray can easily raise funds through stock offerings, this dilutes the value of their existing stock.

As at September 30, 2018, Aurora had cash and cash equivalents of C $ 147.8 million. Tilray had $ 104.2 million in cash and cash equivalents on the same date.

The biggest winner in terms of available funds, however, is certainly the growth of the canopy. At the end of September, Canopy's cash inventory was $ 429 million. But this amount did not include the money received as part of the Constellation Brands transaction, which closed on November 1, 2018. With billions of dollars now in hand, Canopy Growth is in a position enviable.

Advantage: Growth of the canopy.

Cost

This category refers to the valuation of each company. The three shares are definitely listed at a premium compared to their historical performance.

Canopy Growth and Tilray have been back and forth in recent months to build the largest market capitalization in the industry. Currently, Canopy holds the title with a market capitalization of $ 11.5 billion. Tilray is in second place with a market capitalization of $ 9.6 billion. Aurora Cannabis is the third largest marijuana producer in Canada with a market capitalization of $ 5.7 billion.

Based on sales over the last twelve months, Aurora is the most attractive of the three. Aurora also provides the largest capacity for every dollar invested. However, the stock is not cheap.

Advantage: Aurora Cannabis.

Best big marijuana stock

What is the best big stock of marijuana? Tilray can be excluded on the basis of the five C. This leaves an individual confrontation between Aurora Cannabis and Canopy Growth.

Aurora and Canopy win both categories. But are the benefits in terms of capacity and cost of Aurora more important than Canopy's in terms of connections and money, or vice versa? I think that connections and money are more essential to long term success.

Canopy's relationship with Constellation Brands makes me, in my opinion, the first player in the industry. The financial flexibility afforded by the acquisition of Constellation to Canopy could enable it to gain first place in terms of production capacity if it decided to do so. This partnership could also provide Canopy Growth with a significant competitive advantage over its competitors.

Aurora and Tilray could make their own deals that change the rules of the game. For now, however, Canopy Growth is the best large marijuana stock.