Marijuana stocks are still struggling to start 2020, with the Horizons Marijuana Life Sciences ETF up just 2% since the beginning of the new year. Many companies are low on cash and a lack of profitability is only making investors even more hesitant to bet on the industry's recovery just yet. However, Curaleaf Holdings (CURLF) has been bucking that trend, and it's been generating some stunning returns over the past few months. The stock is up more than 26% in the past three months (the Horizons ETF is down 21% during this time).

It's a remarkable turnaround for the stock that has many investors wondering if it can continue rallying even further. Let's take a look at what's behind Curaleaf's recent movement and if investors should buy shares of the company today.

Strong third-quarter performance makes the stock stand out

The big catalyst behind the company's strong rally was when Curaleaf reported its third-quarter earnings in November that showed record revenue of $61.8 million. Even more encouraging, the company recorded positive adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) of $9 million as well. Although it reported a net loss of $7.4 million, it's still a fairly mild loss, and adjusted EBITDA can be a better indicator of the company's performance since it excludes non-cash items like depreciation and amortization.

Cannabis greenhouse.

Image source: Getty Images.

Given how much marijuana stocks have struggled to stay out of the red, Curaleaf's numbers were a positive surprise for investors. And as cannabis companies report losses and announce job cuts, Curaleaf becomes a more attractive investment by comparison. Many cannabis companies are struggling, and although Curaleaf has burned through more than $20 million in cash from its day-to-day operations over the past nine months, it's only a modest increase from the $16 million it used up in its operating activities in the prior-year period. And without any drastic cost-cutting measures announced, there don't appear to be signs that the company is running low on cash or that it's having trouble paying its bills.

How much higher can Curaleaf go?

At $6.25 per share, Curaleaf is still nowhere near the highs it reached in 2019 when it was trading at nearly $12. And it likely won't get back there without a strong fourth quarter to finish the year. Currently, Curaleaf's stock trades at 17 times its sales. That isn't cheap when you consider that fellow multistate operator Acreage Holdings trades at only eight times sales. Curaleaf does compare favorably against Canopy Growth and its 28 times sales. If investors valued Curaleaf at a similar multiple of sales to Canopy Growth, that would give Curaleaf's stock an upside of more than 50% from where it is today, putting its price into double-digits.

However, Canopy Growth is also a less risky stock given that it operates in a Canadian market where pot is legal across the country in addition to having operations in other parts of the world. But Curaleaf has the potential to be a hotter commodity especially now that its acquisition of Cura Partners is finally complete, which will unlock a lot more growth for the company, particularly in California where Cura Partners enjoys strong market share with its Select brand of products.

Is Curaleaf a buy today?

Despite the opportunity that exists for Curaleaf to continue growing, the stock's still too expensive to buy today. While Curaleaf and Canopy Growth continue to be valued higher than many of their peers, those valuations may not last if the companies underperform in their next round of earnings releases. And given how often marijuana stocks have fallen short of expectations, holding Curaleaf heading into earnings can be a risky endeavor.

Until Curaleaf can curb its cash burn and show that its business is more sustainable and profits more consistent, investors may want to hold off on buying shares just yet. There's still too much risk to make Curaleaf a good buy today.