Is Charlotte’s Web (TSX:CWEB) a Better Buy Than Aurora Cannabis (TSX:ACB)?

Competition in the cannabis industry is growing, and it’s getting even harder for industry leaders like Aurora Cannabis (TSX:ACB)(NYSE:ACB) to hold their positions. With a market cap of around $10 billion, Aurora is definitely one of the highest-valued stocks in the markets, but whether it will stay that way is the big question.

Let’s take a close look with how the company compares against Charlotte’s Web Holdings (TSX:CWEB), which recently listed on the TSX.

Recent performance

Aurora is coming off a Q3 where its sales reached $65 million, which was still short of expectations. For the trailing 12 months, the company’s revenues are now at around $168 million, which is significant growth considering sales for fiscal 2018 were just $55 million and $18 million the year before that. However, it’s been the bottom line that has been the issue, with Aurora incurring net losses of $211 million over the past four quarters. And with lots of expansion on the way, it could get a lot worse before it gets better.

In its most recent quarter, Charlotte’s Web posted sales of US$22 million, putting its total for the last four periods at US$78 million, or about $104 million after conversion. It’s well off of Aurora’s pace, but a key difference is that Charlotte’s Web has been able to post profits in each of its past four quarters. While they haven’t been particularly large, the company has even been able to post a positive operating income figure as well.

Strategy and overall potential

The two companies are deploying vastly different strategies from one another. Aurora is focusing on the global market with a presence in dozens of countries, with Canada playing a big role in that. While the company is looking to deploy a hemp strategy for the U.S., it’s going to be well behind Charlotte’s Web, a company that’s already dominating that space. With its products already in thousands of locations across the country, Charlotte’s Web’s strategy has focused on hemp, and it’s proven to be a very strong one thus far.

Overall, Charlotte’s Web certainly has the edge here. Not only has it generated strong growth, but it’s more focused than Aurora’s and has been profitable as well.


Although Charlotte’s Web has had fewer sales than Aurora, it trades at around 21 times its revenues, which is far less than the multiple of 61 that Aurora’s stock trades at. In terms of valuation, it’s clear that Charlotte’s Web provides investors much better value for their money today.

Bottom line

Aurora may be ahead of Charlotte’s Web based on sales, but that could change a year from now, as hemp has been taking off in the U.S. and could lead to even more growth in that segment. And with a more sustainable business model that’s provided stronger financials, it’s hard not to give Charlotte’s Web the edge, especially with its valuation being much more attractive overall.

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 David Jagielski has no position in any of the stocks mentioned.

Source: The Fool
Is Charlotte’s Web (TSX:CWEB) a Better Buy Than Aurora Cannabis (TSX:ACB)?
The Fool

The Motley Fool
Contributor for
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