In This Article:
Until early last year, HEXO (NYSEMKT: HEXO) (TSX: HEXO) and Supreme Cannabis (NASDAQOTH: SPRWF) were close to the same size with their stocks performing similarly. Then HEXO took off while Supreme Cannabis didn't. So far in 2019, Supreme Cannabis has chalked up a solid gain but one that's not as impressive as HEXO's year-to-date doubling in value.
But which of these two marijuana stocks is the better choice now? Here's how HEXO and Supreme Cannabis compare.
Image source: Getty Images.
The case for HEXO
There are three main reasons why HEXO has been a bigger winner than Supreme Cannabis since early last year. And these reasons are also strong arguments why HEXO is still a stock to seriously consider.
One major catalyst for HEXO in 2018 that's still a huge advantage for the company is its supply agreement with Quebec. This deal assures HEXO of a market share of at least 30% in the province. That's tremendously important considering that Quebec is home to the second-largest population in Canada.
Another key factor behind HEXO's successful stock performance is the company's partnership with Molson Coors Brewing (NYSE: TAP). The big beer company picked HEXO as its cannabis partner to form a joint venture named Truss to develop cannabis-infused beverages. This relationship with Molson Coors should improve HEXO's prospects in the Canadian cannabis beverages market expected to open later this year.
What's the third reason for HEXO's strong stock gains? The stock is viewed very favorably by a top analyst. Bank of America's Christopher Carey even thinks that HEXO is the best marijuana stock on the market. Carey especially likes the company's relatively attractive valuation compared to several of its peers.
HEXO's management team deserves a lot of credit for winning the supply agreement with Quebec and the partnership with Molson Coors. There certainly were other companies with plenty to offer in both cases, but HEXO's executives pulled off both deals.
And the company's management recently wrapped up another important deal for HEXO's future. On Tuesday, HEXO announced that it had completed the acquisition of Newstrike Brands. This acquisition boosts HEXO's annual production capacity to around 150,000 kilograms.
The case for Supreme Cannabis
There are also several reasons to consider buying Supreme Cannabis. Perhaps the top argument for the stock is its valuation. Earlier this year, my colleague Sean Williams ranked Supreme Cannabis as the most attractively valued pot stock on the market.