The markets are struggling of late, and while that might be suboptimal if you're holding stocks, it's a great opportunity if you're a buyer. Purchasing stocks at a reduced price can increase the potential returns you make over the long term. And with the S&P 500 falling more than 8% since the start of September, there are going to be some great bargains out there.

One that cannabis investors will want to take a close look at is GW Pharmaceuticals (NASDAQ:GWPH). The medical marijuana stock is trading at about $100 today. That's down from August, when it was comfortably above $130. With such a significant drop in the company's value, let's take a closer look at whether this stock is a deal or if it's destined to go even lower.

GW Pharmaceuticals continues to expand at a high rate

Before the drop in price, things were looking great for GW Pharmaceuticals. On Aug. 6, the U.K.-based company released its second-quarter results for the period ended June 30, in which sales of $121.3 million were up 68% year over year.

There's no secret to the driver behind all that growth -- it's Epidiolex. The seizure medication is the only cannabis-based drug that the U.S. Food and Drug Administration (FDA) has approved. The FDA has given permission for the drug to treat Lennox-Gastaut syndrome and Dravet syndrome, two rare forms of epilepsy.

Pills spilled out from a bottle.

Image source: Getty Images.

In Q2, Epidiolex generated $117.7 million and accounted for 97% of the company's total revenue. Last year was the first full year that Epidiolex was on the market, and it helped propel the company's sales to $311.3 million -- more than 20 times revenue of just $15.4 million in 2018. Epidiolex-related revenue of $296.4 million made up more than 95% of the total that year.

As well as things are going for GW Pharmaceuticals, there's reason to be even more optimistic for the future. A year ago, the European Commission approved Epidiolex to treat the same illnesses that the FDA approved it for in the U.S. GW Pharmaceuticals is slowly rolling out its operations in Europe, focusing on initial markets in the U.K., Germany, Italy, Spain, and France. However, those opportunities are still in the early stages; in Q2, sales of Epidiolex in the U.S. market were $111.1 million, making up more than 94% of total product sales around the world. 

And it's not just the European market that's creating opportunities for GW Pharmaceuticals and Epidiolex. On Aug. 3, the FDA approved the drug for a new indication -- treating tuberous sclerosis complex (TSC). TSC is a rare condition that can cause tumors to grow in vital organs, and 85% of people with TSC also have epilepsy.

Is GW Pharmaceuticals a cheap buy?

Valuing growth stocks can be tricky, especially since many aren't profitable in their early growth stages. GW Pharmaceuticals is no exception to that, posting losses in nine of its past 10 quarterly results. Instead, a better way may be to evaluate the stock using its price-to-sales (P/S) ratio. At a P/S of around 7, the stock's down from earlier in the year when it was trading for more than 8 times its sales.

GW Pharmaceuticals also compares well against other cannabis stocks on this ratio:

GWPH PS Ratio Chart

GWPH PS Ratio data by YCharts.

The company's stock certainly isn't expensive when comparing it to other pot stocks. And with significant growth potential still left in the tank, GW Pharmaceuticals can look even cheaper as its revenue numbers continue to climb.

Should you buy GW Pharmaceuticals today?

GW Pharmaceuticals is a solid long-term stock to hold in your portfolio. Its Epidiolex drug is a necessity for many people. The same can't be said for the THC-based intoxicating productsthat other cannabis companies sell. That inherent stability is what makes GW Pharmaceuticals a much better buy over the long term than your average cannabis investment. 

As more countries around the world legalize medical marijuana, even more opportunities will open up for the company. That's why, whether you buy GW Pharmaceutical shares at $100 or $130, it's likely going to look cheap a few years from now as its business evolves and reaches more patients.

Even if there's a pandemic -- or a recession -- taking place, Epidiolex will remain essential for the patients it helps every day. That resiliency combined with the company's growth prospects make it a terrific investment to hang on to for years and years. And the recent drop in price only makes GW Pharmaceuticals stock an even better buy overall.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium advisory service. We’re motley! Questioning an investing thesis -- even one of our own -- helps us all think critically about investing and make decisions that help us become smarter, happier, and richer.