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Aurora Cannabis (NYSE: ACB) and Charlotte's Web Holdings (NASDAQOTH: CWBHF) rank as two of the hottest stocks in the cannabis industry so far in 2019. Aurora is up more than 70% year to date, while Charlotte's Web shares have gained more than 65%.
But which of these two cannabis stocks is the better pick for investors now? The decision comes down to growth prospects and the ability to capitalize on those prospects. Here's how Aurora Cannabis and Charlotte's Web Holdings stack up against each other.
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The case for Aurora Cannabis
Here's a number for you to keep in mind: $166 billion. That's the amount of annual global marijuana sales that Bank of America analyst Christopher Carey projects could be attainable in the future. Carey isn't out in left field with his estimate. Others have tossed around figures of a worldwide marijuana opportunity of around $150 billion.
Even if these estimates are overly optimistic, they could be way off and still reflect an enormous growth opportunity for Aurora Cannabis. The company's market cap of around $8.8 billion might seem steep right now, but it would only take a small market share of such a huge global market for Aurora to be worth a lot more.
How well positioned is Aurora to capture a decent share of the global cannabis market? Let's look at a couple of key considerations.
First, Aurora is on track to have the highest production capacity in the cannabis industry. It expects to have an annualized production run rate of more than 500,000 kilograms by mid-2020. Aurora's total funded capacity tops 625,000 kilograms. This capacity will enable the company to meet demand and also reduce its costs through efficiencies of scale.
Second, Aurora is in great shape in international medical cannabis markets. Bank of America's Carey thinks that markets other than the U.S. and Canada will comprise close to 63% of the total addressable cannabis market of the future. That's good news for Aurora. The company currently leads all of its rivals in international sales and operates in more international markets than its peers as well.
There are two notable negatives for Aurora right now, though. One is that the company can't compete in the world's largest marijuana market -- the United States -- as long as marijuana remains illegal at the federal level. The other issue is that, unlike several other Canadian marijuana producers, Aurora doesn't have a big partner from outside the cannabis industry.
But these could only be temporary impediments for Aurora. It's possible that the U.S. could change its federal marijuana laws in the not-too-distant future, paving the way for Aurora to jump into the huge market. The company is already considering how it might enter the U.S. hemp market now that hemp is legal throughout the United States. Aurora has also signed up billionaire investor Nelson Peltz to help line up major partners from other industries.