Cannabis stocks haven't been doing well this year, and that's created some great buying opportunities. And none might be better than Village Farms International (NASDAQ:VFF). While it has only dropped around 6% in the past three months, at a market cap of a little over $500 million, it definitely has the potential to get much bigger.

Aphria (NYSE:APHA) got a lot of fanfare about posting a profit in its most recent quarter, but there wasn't the same excitement when Village Farms released its most recent results, which showed an impressive net income figure of $9.9 million. But its stock price actually decreased in the days following the release of its earnings.

Profits have become consistent for Village Farms

Perhaps the reason investors didn't get so excited is that Village Farms has been there before. For three straight quarters, it recorded a profit in what's become a strength for the company. The past two periods in particular have been very strong, with an average profit margin of 24%.

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Image source: Getty Images.

The caveat in all of this is that the profits haven't come from day-to-day operations, as the company recorded an operating loss of more than $7.1 million last quarter. Instead, it has been the company's joint venture, Pure Sunfarms, that has been delivering fantastic results. Village Farms has a 50% stake, and Emerald Health Therapeutics (OTC:EMHTF) owns the other half. 

Still lots of growth ahead

Pure Sunfarms announced earlier in the year that it would be exercising an option on a 1.1-million-square-foot location that would double its annual production capacity to 150,000 kilograms. Not only does it mean more production, but there's also an opportunity for greater economies for the joint venture since the location, called Delta 2, is right next to the company's existing Delta 3 facility. Pure Sunfarms can also exercise an option on Delta 1, which has 2.6 million square feet of space and is currently owned by Village Farms. The option expires in September 2021. 

While Village Farms could be a big player in the Canadian market, it's also making moves to take advantage of the growing popularity of hemp in the U.S. With Texas recently legalizing it, Village Farms is looking at obtaining a license since it has a location in West Texas where it is converting half of the greenhouse for hemp production. Although the farm bill did legalize hemp federally, not all states permit hemp.

In addition to Texas, Village Farms has multiple joint ventures that will give it space for outdoor cultivation in Colorado, North Carolina, South Carolina, and Virginia. 

Key takeaways for investors

What stands out from all this is the significant growth potential for Village Farms. With revenue totaling more than $41 million in its most recent quarter and the company positioning itself for significant opportunities in both Canada and the U.S., it could be an underrated buy given how big the company could grow. And with a price-to-sales ratio of just over three, it's a fairly cheap stock, especially since marijuana companies have traded at much higher multiples in the past. For investors looking for a profitable cannabis operation, Village Farms could be a great option today.