They've both been struggling for a while, and they're still deep in the woods.

When it comes to cannabis stocks, there's always a few turnaround plays that might be tempting targets for investment. As the marijuana industry grows globally, more than a couple of companies have overextended themselves by building so much output capacity that they outpaced demand. While it's a bit of a gamble, these competitors just might be a bargain, especially if they can effectively scale back their operations. 

In particular, Aurora Cannabis (NASDAQ:ACB) and Hexo (NASDAQ:HEXO) are two underperforming companies that are working to reposition themselves to become more stable and successful. Neither of these stocks are for the faint of heart, but let's investigate each to see if they could be worth a contrarian buy.

Can Aurora follow through on its transformation plan?

Aurora Cannabis has been struggling for quite some time, and it's in the midst of an ambitious business transformation plan that aims to slash its costs and right-size the company. So far, there has been some noteworthy progress. To date, it has realized CA$33 million in annual cost savings out of an estimated total of up to CA$80 million. 

That's sure to help its CA$375.27 million in cash stretch a bit further, which will be necessary. Quarterly revenue shrank by more than 11% in Q1 of FY 2022 to reach CA$237.77 in trailing sales; reaching profitability through a high rate of growth isn't looking feasible.

Management claims that Aurora will become profitable in the first half of FY 2023. But I'm not convinced that will happen yet. In the most recent quarter, Aurora's gross margin rose by only 1% even when making accounting concessions to adjust for fluctuations in the cost of cannabis. Aurora's net profit margin is deeply in the negative at -250%, meaning that it's still generating deep losses every quarter.

Still, moving forward it'll need to keep reducing its costs and increasing its revenue to have a chance at paying down its debt of CA$406.78 million.

Hexo is growing, but will it be enough to stay solvent?

With a fresh CEO and a handful of revenue-bearing acquisitions in the bag during 2021, things may be looking up for Hexo, provided that it can find a way to survive the next 12 months. Compared to a year ago, its total net sales grew by 43% in the fourth quarter, and there should be more to come.

To its credit, management has been candid about the fact that the company doesn't have enough cash on hand to pay off its looming debt obligations while also continuing to invest in scaling up its operations. So shareholders should expect to have their equity diluted -- assuming Hexo doesn't put its growth plans on hold or work out a new arrangement with its lenders, which it has already done once.

None of those options sound very enticing for the prospects of a new investment, to say the least. If Hexo can find a way to become more profitable while getting the capital it needs, it'll pull through for investors, but I wouldn't bet on it as of now.

You probably shouldn't buy either of these stocks

Neither of these companies are in good shape, and they haven't performed well for their shareholders. Nor will the challenges of next year be gentle on either of them.