Curaleaf Holdings (CURLF -4.30%) has had a good year, and it's likely to get better once November rolls around. Shares of the Massachusetts cannabis company are up more than 41% year to date, and Curaleaf posted record revenues last quarter.

The company has 93 retail stores throughout 23 states and claims to be the biggest cannabis company in the U.S. by revenue. It's well-situated in a licit market that is expected to grow at a compound annual growth rate (CAGR) of 14%, reaching $30 billion by 2025, according to New Frontier Data. Worldwide sales of cannabis are also expected to skyrocket to $47 billion by 2025, as reported by San Francisco cannabis investment firm Arcview Research.

Here are three reasons why I think Curaleaf is still a good buy right now, even when taking into account its stock price's rise this year:

$100 bill cut in the shape of a marijuana plant.

Image source: Getty Images.

1. Impressive record of improving revenue

In the second quarter, the company reported a record $117 million in revenue, a jump of 22% over the previous quarter and a whopping 142% year-over-year increase. The company cited the addition of its Select brand for a large portion of that increase; Select boosted wholesale sales by 422% year over year and helped retail sales climb by 112%. The company also said the addition of new stores in Florida, Massachusetts, and New York and added dispensaries in Nevada, Maryland, Arizona, and Nevada helped drive retail sales.

There are few consistently profitable pot stocks for investors to choose from, but many are now hopeful that Curaleaf could join this elite group as soon as early 2021.

What may be more important, though, is that with all the additional revenue, the company lost only $2 million in the last quarter. A loss of "only" $2 million is impressive, considering that Curaleaf lost 12 times that in the same period last year. Meanwhile, Curaleaf's revenue growth has been solid and steady. It has reported five consecutive quarters of positive earnings before interest, taxes, depreciation and amortization (EBITDA). Curaleaf should achieve profitability if those earnings continue. 

CURLF Revenue (Quarterly) Chart

CURLF Revenue (Quarterly) data by YCharts

2. New Jersey could soon permit adult-use marijuana

A ballot initiative this fall would legalize adult-use recreational marijuana in New Jersey, a state with nearly 9 million residents. This will be a big deal, particularly for companies that already have a significant footprint in the state's medical marijuana industry. A recent Monmouth University poll showed that 62% of registered voters favored legalizing adult-use marijuana in the state.

Curaleaf is already the largest medical-marijuana distributor in New Jersey. It wholesales product to several other dispensaries, operates a dispensary in Bellmawr, and has plans to build a second in Bordentown. In anticipation of the legalization of recreational marijuana, the company said it plans to open a 110,000-square-foot facility in early 2021. Curaleaf is ready for and capable of selling marijuana in the state to a larger audience. In 2019, Curaleaf took home $11 million of $53 million in total medical marijuana revenues in New Jersey. The medical marijuana industry alone could reach $850 million to $950 million in sales by 2024, according to a Marijuana Business Daily projection.

If, as expected, New Jersey votes to legalize adult-use recreational marijuana, it's not a stretch to presume that the rest of the Northeast will (eventually) follow. Curaleaf's home state of Massachusetts already allows it, and Maine began adult-use sales this month. New York, Pennsylvania, Connecticut, and Rhode Island, all of which are looking for additional tax revenues, are discussing legalization of adult-use marijuana. Curaleaf is already in a strong position in New Jersey and Massachusetts, so connecting with the rest of the region would be natural for the company.

3. A smart acquisition strategy

Curaleaf has made some smart deals this year that will increase the company's bandwidth. In February, after a nine-month period, Curaleaf finally completed its $948 million purchase of Cura Partners, and along with it, the Select brand. In July, the company finalized its $1.1 billion purchase of Grassroots, extending Curaleaf's reach from 18 to 23 states and earning the business a total of 135 dispensary licenses, 30 processing sites, and 22 cultivation sites.

The company has also made smaller deals that will help it grow. In January, it completed its purchase of Acres Cannabis in Nevada. Curaleaf now has two dispensaries in Las Vegas and another in Ely, along with two cultivation facilities and two processing sites in the state.Last spring, Curaleaf bought three Arrow Alternative Care dispensaries in Connecticut, where the state's Democratic governor, Ned Lamont, has publicly pushed for the legalization of adult-use marijuana.

Only the strong shall survive

Investing in pot stocks comes with more risks than investing in other types of businesses. As the legal rules regarding cannabis swiftly change around the country, investors will need to keep an eye on how different companies react to new market opportunities.

While Curaleaf's share price has climbed more than 41% year to date, that's because investors can see the company moving toward making a profit, with earnings per share and cash from operations rising fast.


CURLF data by YCharts

CURLF Normalized Diluted EPS (Quarterly) Chart

CURLF Normalized Diluted EPS (Quarterly) data by YCharts

While it would have been better to get in on the stock when it was lower, I don't see it coming down any time soon. Rather, it seems that if it was able to grow during a pandemic, that growth may be just beginning.

It's likely that only a few major players will dominate the U.S. market. At this point, that may be the biggest reason to jump on the Curaleaf bandwagon. The company is a big player that is thinking long-term.