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Aphria (NASDAQOTH: APHQF) and GW Pharmaceuticals (NASDAQ: GWPH) are both in the medical marijuana industry. However, the companies have very different business models. Aphria ranks among the largest cannabis growers in Canada, while GW Pharmaceuticals is a cannabinoid-focused biotech.
GW Pharmaceuticals has been the much bigger winner for investors so far this year. Its share price is up more than 10%, while Aphria stock is down nearly 40%. But which of these two marijuana stocks is the better pick now? Here's how Aphria and GW compare.
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The case for Aphria
If you're looking for the stock of a company that should soon post astronomical revenue growth, Aphria should be an excellent candidate. When Aphria reported its Q3 results in April, its sales totaled 10.3 million Canadian dollars ($8.2 million). That was an all-time high for Aphria, but it will probably be only chump change compared to what the company could make later this year.
Canada's market for adult use of recreational marijuana opens nationwide in October 2018. Aphria appears to be poised to capture a significant share of that market. The company is ready to target what could be a large retail customer base thanks to its partnership with Southern Glazer's, the largest wine and spirits distributor in North America.
Aphria also has cranked up its production capacity in anticipation of tremendous demand for both medical and recreational marijuana. The company expects to be able to deliver 225,000 kilograms per year by early 2019.
There are even more opportunities for Aphria outside of its home country. Germany legalized medical marijuana last year. Aphria's acquisition of another Canadian marijuana grower, Nuuvera, provided an entree into the German market. And while Aphria dialed back its initial plans to expand in the U.S. due to the threat of its stock being delisted from the Toronto Stock Exchange, the company should be able to quickly jump back into the U.S. market should federal marijuana laws change.
It's possible that Aphria could find a major partner in the not-too-distant future. Large alcoholic beverage company Molson Coors Brewing reportedly has been in talks with a few Canadian marijuana growers about making an investment and developing cannabis-infused beverages. Aphria is said to be among the top candidates if Molson Coors moves forward with its plans.
The case for GW Pharmaceuticals
GW Pharmaceuticals hasn't made a ton of money off of its first cannabis-based product, Sativex. The drug is sold in several countries -- but not the U.S. -- as a treatment for multiple sclerosis (MS) spasticity. However, GW could be rolling in the dough relatively soon.