Even before the legalization of marijuana in Canada in 2018, cannabis companies were busy investing billions of dollars in facilities to meet implausible demand projections, as well as acquiring their competitors at inflated prices. Looking back, the entire series of events placed the foundation for a catastrophe in the sector. Indeed, the Horizons Marijuana Life Sciences ETF (TSX:HMMJ), an index that tracks the performance of sector constituents, is now down nearly 80% from all-time highs. 

Now that the bubble has burst, investors have opportunities to do the previously unthinkable -- buy top marijuana stocks at a great value. Today, let us look at two companies in this category and how they can reignite their momentum for long-term growth. 

1. HEXO

HEXO (NYSE:HEXO) is a weed producer that grossly miscalculated the demand for marijuana but quickly improvised to overcome its headwinds. The company focuses mainly on three production aspects -- high-quality cannabis (greater than 20% THC content), value brands, and mass production of low-grade cannabis to squeeze out competitors in the black market. So far, HEXO has a leading market share of 33% in Canada's second-most populous province, Quebec.

In the first nine months of fiscal 2020, HEXO nearly doubled its gross revenue year over year, from CA$38.7 million to CA$74 million. That's even though the company sold a mere 25,427 kilograms out of its current annual production capacity of 90,000 kilograms of cannabis in the past four quarters.

As a result of this supply-demand mismatch, HEXO recognized a massive write-off of CA$111.9 million in goodwill and CA$42 million in unsold inventory, and took CA$106.2 million worth of asset impairments in January. Such non-cash losses did not continue into the third quarter.

Right now, the company has about CA$27.3 million in long-term debt and CA$48.7 million in convertible note liabilities, which is more than cushioned by its CA$94.3 million in cash and CA$17.4 million in investments. Despite its resilience, the stock is trading for only 3.4 times price-to-sales and 0.8 times price-to-book-value. As icing on the cake, HEXO expects to generate positive operating income less non-cash adjustments (EBITDA) by the end of the first half of 2021. 

2. Aphria 

Like HEXO, Aphria (NASDAQ:APHA) is also trading for rock-bottom valuations -- in its case, 2.7 times price-to-sales and 0.93 times price-to-book value -- despite growing its revenue by more than 100% in its 2020 fiscal year. The company's sativa, indica, CBD oil, and other products won seven Canadian Cannabis Awards last year.

In addition, the company also has a robust portfolio of vape products, with its Good Supply brand reaching No. 1 in popularity in three major provinces. The company's vape segment accounts for about 29% of the entire market in Canada. During fourth-quarter 2020, Aphria's recreational cannabis revenue grew to CA$56.7 million from CA$18.5 million in Q4 2019.

Unlike HEXO, Aphria also has a growing international segment emphasizing operations in Germany and Latin America. One of the company's subsidiaries, CC Pharma, now imports and distributes medical marijuana to 13,000 out of about 19,000 retail pharmacies in Germany.

Combined, the company's net revenue increased from CA$237.1 million last year to CA$543.3 million. Q4 2020 was Aphria's fifth consecutive quarter of generating adjusted EBITDA. The company recognized just CA$64 million in asset impairments and had a net positive adjustment to its inventory.

When it comes to financial health, Aphria has that handled as well. The company's cash and investments of CA$500 million are more than enough to offset CA$129.6 million in long-term debt and CA$270.8 million in convertible-note liabilities. If investors are looking for a well-rounded cannabis value stock, then Aphria should definitely be on the top of their shopping list.