5 Things You Need to Know About Aurora Cannabis Before Buying

You might have heard that a top analyst who covers the cannabis industry picked Aurora Cannabis (NYSE: ACB) as the best marijuana stock on the market right now. You also perhaps have noticed that Aurora's share price has soared more than 90% so far in 2019.

With the analyst's accolades and the powerhouse performance, you might be wondering if now is the time to buy Aurora Cannabis stock. The answer is... maybe. Here are five things you need to know first, though, before buying the hot marijuana stock.  

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1. It's on track to have the highest capacity in the industry

Here's a key fact about the marijuana industry: A company can only sell what it can produce. Of course, that's true for pretty much any industry. But here's another fact about the marijuana industry that doesn't apply to most industries: Companies can sell everything they can produce. That's what happens when demand is greater than supply.

If you put these two facts together, it makes sense that the most successful companies in the marijuana industry will have the most capacity. The good news for Aurora Cannabis is that it's on track to have the highest capacity in the industry.

Aurora expects to have an annualized production run rate of 150,000 kilograms by the end of this month. But its funded annual capacity targeted for mid-2020 tops 500,000 kilograms. And that figure doesn't include the boost to capacity that Aurora's acquisition of ICC Labs will bring. 

2. It's No. 2 in the Canadian recreational pot market

The Canadian adult-use recreational marijuana market is still in its early days. We know already, though, that two companies have emerged as the clear leaders based on their latest quarterly updates. 

Canopy Growth (NYSE: CGC) claims the highest market share in the Canadian recreational pot market. However, Aurora Cannabis isn't too far behind with a 20% market share in the quarter ending Dec. 31, 2018. There could be some jockeying in position down the road, but it seems likely that Aurora will stay near the top over the long run.

3. It's arguably the leader in international markets

This one's a close call. Aurora reported international sales of 2.9 million in Canadian dollars (around US$2.2 million) in the last quarter compared to Canopy Growth's total international sales of CA$2.7 million (around US$2 million). That's a tiny difference, especially considering how early it still is for global medical marijuana markets. 

But Aurora recently began shipping cannabis oils to Germany, which will almost certainly spark its international sales growth. The company also is active in 24 countries spanning five continents. That's even more than Canopy Growth, which has operations in 16 countries. 

The biggest drawback for Aurora from an international perspective is in the U.S. Aurora can't enter the U.S. marijuana market and retain its listing on major stock exchanges as long as marijuana remains illegal at the federal level. Canopy has already announced plans to jump into the U.S. hemp market, but Aurora hasn't done so yet. 

4. It's angling for strategic partnership deals

Another area where Aurora is indisputably behind Canopy Growth is in strategic partnerships. Big alcoholic beverage maker Constellation Brands has poured over $4 billion into Canopy and owns a 38% stake in the company. So far for Aurora, there have only been rumors of potential deals with major companies outside of the cannabis industry.