Over the past three and a half years, Chart Industries (GTLS 0.74%) shares have been on an absolute tear, gaining over 350% since the beginning of 2016. To some extent, I'm cherry-picking that time frame -- that's very close to when its stock price was at a five-year low and was down almost 90% from the all-time high, reached in late 2013.

But even with that caveat, Chart is absolutely killing it. Since the beginning of 2016, revenue is up 62% and earnings per share has increased an incredible 183%. Moreover, the company is set up for very big things over the next few years, as the energy industry goes through a period of massive demand for cryogenic gas processing equipment, of which Chart is a leading maker.

Super-cooled liquid being poured into a container.

Chart could become the preferred provider of processing equipment for cannabis product makers. Image source: Chart Industries.

However, natural gas may not be the only megaindustry that presents Chart with a big opportunity. On the first-quarter conference call, CEO Jill Evanko called out the massive global growth of cannabis in the coming years, describing it as having "double-digit growth potential" for the company, considering the expectation for global cannabis sales to reach $32 billion within a few years.

Could cannabis be Chart's next big source of growth? Let's take a closer look. 

Just how big is the cannabis opportunity?

According to Evanko, there were $10.5 billion in legal (at the state level) cannabis sales in the U.S. in 2018, and that amount is expected to more than double to $22 billion in 2022, and close in on $32 billion around the world.

And that could be just the beginning, considering that pot is still illegal in much of the world (and still against federal law in the U.S. despite many states legalizing it). How big is its potential? Global soda sales are well over $200 billion every year, and global beer sales are close to $600 billion. People will spend money on a product they get enjoyment from.

Moreover, cannabis continues to become more socially acceptable, and that should help drive further legalization efforts in the U.S. and abroad. And that legalization is creating a massive opportunity for companies across the spectrum, including Chart, to profit.

What exactly is Chart's opportunity in cannabis?

Perhaps the biggest drive behind cannabis' acceptance has been the fact that legalization isn't just leading to more people firing up a joint, or getting their bong out of the attic where they've been hiding it since college. To the contrary, edible products that don't require smoking pot have been one of the biggest sources of interest from consumers who want the, ahem, experience of cannabis without the skunky side effect.

Moreover, there are plenty of people out there looking to cannabis for something more than getting stoned. For instance, there's massive demand for products containing CBD, the nonpsychoactive cannabinoid purported to have numerous health benefits. (I have a 50-something friend who claims it's made a big difference in his pain management.)

It just so happens that Chart manufactures equipment that works in what is becoming the preferred method for extraction of the oils cannabis companies use to make their products: supercritical CO2 extraction. Evanko described the process and Chart's solution on the first-quarter earnings call:

Supercritical CO2 extraction is the process that increases pressure and temperature of liquid CO2 to become a more efficient solvent and is more versatile for creating a variety of end products by controlling temperature and pressure. Additionally, CO2 creates a pure, clean, quality oil that is safe to produce with little to no post-processing, unlike alternative toxic solvents. Chart is the first to market with a bulk liquid tank at 750 PSI for use in its accelerating extraction market.

As CBD products and edibles continue to grow in demand and competition heats up, the companies manufacturing these products will look for every advantage they can to drive down costs, improve products, and increase throughput. Chart's legacy as a supplier to industrial-scale companies means it has the know-how to deliver a viable solution, and its experience as a biomedical and food service industry supplier further underpins its expertise in working with companies delivering a product humans will consume.

Starting from zero

At this stage, cannabis is probably not even a rounding error on Chart's operating statement; the company is starting as close to zero in sales to the industry as this point. But many of the biggest winners in the pot stock space over the past few years didn't even exist a decade ago. 

So the big takeaway is that, while there's opportunity for Chart in this nascent industry, I'm not willing to let it underpin my thesis on Chart until we see a few quarters -- and more likely a couple of years -- of sales results to the industry. For now, the natural gas spending cycle is set to be the company's biggest catalyst.

And it's a huge one. Even after its share price has skyrocketed the past few years, there's still upside. Chart earned $2.70 per share in 2018, but after a recent acquisition and with its existing pipeline of deals, it could earn upwards of $8.75 per share in 2020, more than tripling its profits in two years.

Whether it turns out to be an under-the-radar pot stock or not remains to be seen, but there's certainly a tremendous amount of upside for investors, even if cannabis isn't as great an opportunity for Chart as it is for so many other companies.