These two cannabis companies are trying to gobble up market share so which is the better investment: Aurora Cannabis or Trulieve cannabis?
Jan. 15, 2022
The Green Rush has been nothing more than an initial surge in prices followed by a multi-year decline. Delayed licensing and black-market competition proved to be very heavy obstacles for weed growers. In fact, all publicly traded cannabis companies have lost significant value save for one outlier: IIPR. As for profitability, very few can make that claim, but we look at one that can. Today, we ask which is the better buy, Aurora Cannabis (NASDAQ: ACB) or Trulieve Cannabis (OTCMKTS: TCNNF)?
Aurora Cannabis: bulls vs bears
As one of the leading cannabis companies in Canada, Aurora is poised to take advantage of the growing adoption of marijuana for recreational and medicinal use. And when (not if) marijuana is legalized federally in the U.S., Aurora’s profits are sure to soar. In a long-term effort to cut costs, the company reported continued success on that front in its last quarterly report (Q1 2022), where it reported an 88% drop in net loss year-over-year (YoY). Additionally, net cash used for operations decreased by nearly 80% while cash and equivalents rose by over 145% in the same period.
However, the company still operates at a loss and has had to issue shares in the past to stay afloat. In fact, Aurora’s outstanding shares grew over 103% from 97.41 million shares to 198.23 million shares in the last two years alone. The company’s stock price is down year-to-date (YTD) and has dropped 54% YoY.
Trulieve Cannabis: bulls vs bears
Trulieve operates primarily in Florida, where it has 113 stores and roughly 50% of the state’s market. It belongs to the very limited club of profitable weed growers in the industry and has since 2017. A few months ago, the company completed the acquisition of Harvest Health to become the largest and most profitable multi-state cannabis company in the U.S.
Now for the numbers. As per its latest quarterly report (Q3 2021), revenues are up nearly 65% and gross profit climbed over 50%, YoY. Furthermore, net income surged nearly 50% as well and EBITDA rose over 46% in the same time period. Really impressive figures for any company, let alone one that deals in cannabis.
Growing competition is always a concern. However, as most cannabis companies are still struggling to reach profitability, it won’t be much of a worry for Trulieve
So, which is the better investment?
Trulieve is the clear winner as one of the few profitable weed firms on the market. With its recent acquisition, there is little doubt that future earnings reports will continue to impress.