A comparison of the technicals and fundamentals behind CGC and CRON
On Dec. 4, the U.S. took a major step forward in its path toward the federal decriminalization of marijuana. The MORE Act, which would remove marijuana from the list of scheduled substances and eliminate criminal penalties for the possession, manufacturing, and distribution of the substance, was passed by the House of Representatives. The bill still needs to pass through the Senate, but this recent news has reinvigorated investor interest in cannabis stocks.
We will be comparing two of the biggest cannabis stocks today: Canopy Growth Corporation (NASDAQ:CGC) and Cronos Group Inc. (NASDAQ:CRON). Out of the two, Canopy Growth gas a market cap $10.55 billion, more than triple that of CRON which is $3.05 billion.
Both cannabis stocks have seen modest gains in 2020; CGC is up 44% year-to-date, while CRON has tacked on 10%. They both boast huge quarterly gains of 98% and 69%, respectively, with support in place at their ascending 10-day moving averages.
On the current year, Cronos Group has reported $100 million in net profits compared to Canopy Growth's net income of -$1.5 billion. However, Canopy Growth by far surpasses Cronos Group in terms of overall revenue. Canopy Growth has produced $477 million in the past twelve months, more than 10 times what Cronos Group's $37 million over the past twelve months.
Both companies carry very solid balance sheets. Canopy Growth has about $2 billion in cash and Cronos Group doesn’t lag too far behind with approximately $1.3 billion in cash. However, Cronos Group's figure is far more impressive due to the company’s significantly smaller size. Both Canopy Growth and Cronos Group solidly have more in cash and cash equivalents than each has in total debt.
It is still too early in the process to be able tell which company will win the majority of the market share, if any. However, at this time and with the rapid growth of the cannabis industry, it still seems there is plenty of room for growth for all major players for the foreseeable future. Cronos Group is currently at an earlier stage in developing its company, but it hasn't shown quite as impressive growth as Canopy Growth did in its earlier stages. At the moment, Canopy Growth stock is the safer bet due to its higher revenues and its majority market share. Don't count out Cronos Group yet, though.