3 Reasons Why Cronos Group (TSX:CRON) Is a Better Investment Than Aurora Cannabis (TSX:ACB) Stock

Aurora Cannabis (TSX:ACB)(NYSE:ACB) has garnered a lot of the attention thus far among pot stock enthusiasts, along with the likes of peers Canopy, Aphria, and a handful of other licensed Canadian producers.

Yet there’s another multi-billion-dollar Canadian cannabis producer that has, up to now, been flying under the radar, and it’s one that investors ought to be paying a lot more attention to.

I’ll highlight what I feel are three important reasons investors should think about giving more love to Cronos Group (TSX:CRON)(NASDAQ:CRON) and the company’s intriguing vertically integrated business model, rather than Aurora Cannabis and some of the industry’s other more well-known, big-name players.

Cronos’s vertically integrated strategy just makes a whole lot of sense

The more time that I spend thinking about the merits of Cronos’s vertically integrated business model, the more I wish I had given it more thought earlier in the game — like maybe at the beginning of last year before the value of CRON stock would go on to nearly triple in value.

Instead of following the conventional model of growing, branding, and selling cannabis product — the same model that is being pursued by nearly every other Canadian licensed pot producer out there these days, Cronos has decided to take a different approach.

Cronos’s strategy is to source its raw cannabis product directly from independent cultivators.

The fact that traditionally — and the case of the cannabis plant should, in theory, be no different — farmers have only been able to extract minuscule profit margins from their harvests means that Cronos can spend more time focusing on higher-value activities related to the branding and marketing of its product line.

Aurora seeks to acquire target companies. Cronos was acquired as a target company

Investors should be skeptical when they see a company aggressively pursuing M&A activity, as it can (and often does) lead to disastrous results for shareholders.

Aurora has been on a spending spree of historic proportions as of late, and while I appreciate the proactive approach to try and secure market share in rapidly growing industry, I appreciated it even more when mega-cap company Altria Group (formerly known as Phillip Morris) stepped up to buy a multi-billion-dollar control stake in Cronos.

Even in light of Altria’s massive $102 billion market capitalization, a $2 billion investment is far from “chump change” for the historic tobacco giant and certainly gives reason to have (a lot more) confidence in the company going forward.

Altria’s management experience should prove invaluable as Cronos expands internationally

The depth and breadth in Altria’s management team should prove invaluable for Cronos and the company’s shareholders, as cannabis firms compete aggressively to secure their own share of the international pot pie.

In an industry already ripe with inexperience, not to mention mostly uncharted waters, Altria’s past successes in creating markets and bringing products to consumers could end up being a deal maker and help Cronos separate itself from the rest of the pack. 

You might be missing out on one of the biggest opportunities in Canadian investing history…

Marijuana was legalized across Canada on October 17th, and a little-known Canadian company just unlocked what some experts think could be the key to profiting off the coming marijuana boom.

Besides making key partnerships with Facebook and Amazon, they’ve just made a game-changing deal with the Ontario government.

One grassroots Canadian company has already begun introducing this technology to the market – which is why legendary Canadian investor Iain Butler thinks they have a leg up on Amazon in this once-in-a-generation tech race.

This is the company we think you should strongly consider having in your portfolio if you want to position yourself wisely for the coming marijuana boom.

Learn More About This TSX Stock Now

More reading

Fool contributor Jason Phillips has no position in any of the stocks mentioned.

Source: The Fool
3 Reasons Why Cronos Group (TSX:CRON) Is a Better Investment Than Aurora Cannabis (TSX:ACB) Stock
The Fool

The Motley Fool
Contributor for investorsnews.ca
The Motley Fool is dedicated to helping the world invest — better. Founded in 1993 by brothers Tom and David Gardner, The Motley Fool helps millions of people attain financial freedom through our website, podcasts, books, newspaper column, radio show, mutual funds, and premium investing services.

In all we do, we take a different approach.

We believe – and have proven over decades – that the individual investor can beat the market.

We believe that anyone can do it, even if they don’t have a lot of time or money to devote to investing.

We believe in a long-term outlook, helping people build wealth over time.

We believe that the person best positioned to take care of your financial future is you.

And we work tirelessly on behalf of our hundreds of thousands of members who are enjoying the opportunities that come with having enough money to do the things that matter to them.

While we are headquartered in Alexandria, Va., The Motley Fool advocates for the individual investor around the globe with offices in the UK, Australia, Canada, Singapore, and Germany.

Related posts