Aurora Cannabis Vs. Cronos: Which Stock is a Better Buy?

Marijuana investors have experienced a whirlwind ride over the last 24 months. In October 2018, Canada legalized pot for recreational use which resulted in a massive bull run as investors were overly optimistic about this development. However, as with any nascent industry, marijuana producers also faced a number of teething issues…

The Canadian pot producers have been grappling with competition from a thriving black market and the slow rollout of retail stores in major provinces. This in turn led to lower than expected demand and rising inventory levels.

Most cannabis companies are impacted by widening losses and million-dollar write-downs. This has meant marijuana companies north of the border are swirling in turmoil and burnt massive investor wealth in the last 18 months. The bull run of 2018 seems like a distant dream as the cannabis house of cards has come tumbling down at an unprecedented pace.

However, a Joe Biden win has renewed the hopes of cannabis investors. During the pre-election debate, Vice President-elect Kamala Harris said the Democrats will decriminalize marijuana use at the federal level and might even legalize it which has driven the recent recovery in pot stocks.

Let’s take a look if it’s the appropriate time to invest in beaten-down companies such as Aurora Cannabis (ACB) and Cronos (CRON).

Aurora Cannabis is down 93% from record highs

Shares of marijuana giant Aurora Cannabis are trading at $8.75 which is 93% below its record high. However, it has almost doubled since preliminary election results were announced on November 4.

In the September quarter, the company’s total cannabis net sales were down 4.1% at CA$67.8 million. While the sales decline is worrisome, investors should be even more concerned with Aurora’s EBITDA losses of CA$57.8 million, compared to a loss of CA$33 million in the prior-year period.

Aurora expects to achieve a positive EBITDA in the December quarter but it seems like a pipe dream right now for a company that is grappling with falling sales. Even though Aurora has managed to…

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