The price of Aurora Cannabis (NYSE:ACB) stock is down 90% from record highs. But despite its massive decline in market value, the marijuana giant continued to disappoint investors in its most recent quarter. In comparison, rival Canadian cannabis company Tilray (NASDAQ:TLRY) seems a much better stock to bet on in the wake of its merger with Aphria (NASDAQ:APHA), completed earlier this month. Let’s take a closer look at both names.Cannabis stocks remain popular with investors for good reason. The marijuana industry is still in a nascent stage, which makes it attractive for growth investors. However, while pot producers in the U.S. are on the cusp of profitability, their peers north of the border are struggling with a slew of structural issues.
The rollout of licenses for retail outlets in major Canadian provinces has been slower than expected, which has impacted demand. This in turn has hurt top-line growth and profit margins due to massive inventory write-downs. A thriving black market and a rise in competition have not helped either. Alternatively, the prospect of marijuana legalization in the U.S. at the federal level suggests potential access to a larger market for Canadian cannabis producers, which would afford them improved both revenue and profits at a fast clip.
Here, we take a look at two Canadian stocks, Aurora Cannabis (ACB) and Tilray (TLRY), that have significantly underperformed the broader markets in the last two years to see which is a better contrarian bet today.