U.S. cannabis companies have been in the limelight since the pandemic hit. Legal cannabis sales in the U.S. grew 46% year over year to $17.5 billion in 2020, and some companies saw their revenue triple.

But one in particular, Massachusetts-based Curaleaf Holdings (CURLF -8.78%), might just be the best pot stock you will ever hold. Over the past 12 months, Curaleaf's stock has surged 274%, outperforming the industry benchmark Horizons Marijuana Life Sciences ETF's gain of 122%. 

This cannabis company is on a roll. Its financial performance was exceptional in each quarter of 2020. Its ability to expand by opening close to 50 new dispensaries amid a pandemic drove its revenue growth. It has also been reporting consistent positive earnings before interest, tax, depreciation, and amortization (EBITDA). Let's take a look at why Curaleaf is a gem among a crowded field of cannabis players right now.

A femaile holding a cannabis plant

Image source: Getty Images.

Curaleaf's revenue growth is outstanding

Curaleaf's fourth-quarter total revenue jumped by 205% year over year to $230 million. Both of its segments -- retail and wholesale -- saw solid sales numbers. Retail revenue jumped 242% to $165 million in Q4 versus the year-ago period, while wholesale revenue recorded a whopping 578% increase year over year to $64.4 million.

Being a vertically integrated company has allowed Curaleaf to control its supply chain and avoid major production disruptions during the public health crisis. And its acquisitions have been a driving factor for revenue growth. The acquisition of hemp cannabidiol (CBD) company Grassroots, in particular, is helping the company meet growing national demand. Curaleaf gained 135 operating dispensaries with 1.6 million square feet of cultivation capacity from the acquisition, which it closed in July 2020. Besides Grassroots, Curaleaf completed acquisitions of Select, Curaleaf NJ, Arrow, MEOT, Remedy, Blue Kudu, and Alternative Therapies Group in 2020. These timely and strategic acquisitions are writing the company's success story.

Its Select brand is now available in 1,700 retail outlets, up from 800 at the start of 2020. Management hopes this number will reach 2,000 by the second quarter of 2021. The company acquired the cannabis oil brand from Cura Partners in February 2020 for $948.8 million.

Curaleaf is not profitable yet. EBITDA measures a company's earnings before any deduction of expenses, depicting its operating performance. Meanwhile, net income, or real profits, is the total earnings of the company after the interest, tax, depreciation, and amortization deductions. So while it hasn't made it to profitability quite yet, at the rate that its revenue is growing, along with lower expenses and consistent positive EBITDA, it won't be long before it ends up truly in the black. In its fourth quarter, its positive adjusted EBITDA came in at $54 million compared to $14 million in Q4 2019. In fact, Curaleaf has recorded positive adjusted EBITDA in all of its quarters in 2020.

Its expansion plans are impressive

At the beginning of 2020, Curaleaf just had 54 dispensaries across 17 U.S. states. As of March 9, it operates 101 stores in 23 states.  In the first three months of 2021, the company has already opened five new stores in Florida, Pennsylvania, and Maine. Curaleaf holds an additional 37 licenses to open retail stores in the U.S., and it plans to open another 23 dispensaries in 2021 to strengthen its national footprint.

While expanding in the U.S., the company is making its way into the European cannabis market. Along with its Q4 results, the company discussed its proposed acquisition of EMMAC Life Sciences Group, Europe's largest independent cannabis company. It expects to close this acquisition by the second quarter of 2021. The European cannabis market offers good prospects for U.S. and Canadian medical cannabis companies. It is expected to expand at a compound annual growth rate (CAGR) of 29.6% through 2027 to reach $37 billion.

Curaleaf's success until now is also a reflection of its strong C-suite leadership team. Executive chairman Boris Alexis Jordan stated in the Q4 earnings call that he sees great opportunity in the European medical cannabis market, which is estimated to cross $5 billion in sales over the next three years.

A pot stock you can trust to double your money

Maybe the most fascinating aspect of Curaleaf is its effort to keep its balance sheet strong, despite focusing on expansions. It ended its fourth quarter with $73.5 million of cash on hand and $291.5 million of outstanding debt, net of unamortized debt discounts. Though this is a big amount of debt, Curaleaf is consistently growing its revenue and EBITDA, and as mentioned, it's getting ever closer to profitability. Also, most of its debt involves financing that the company further utilizes in acquisitions and support future growth initiatives that could boost its revenues further.  

Curaleaf's 2020 performance is proof that it has even more potential. 2021 could be a fruitful year for the company once it expands to more U.S. states, and management believes it will be a "transformative year." The company has been aggressive with its growth strategies and acquisitions that have paid off well up until now. It continues to focus on expanding, which could prove advantageous this year. A strong leadership team, stable financial position, wise growth strategies, expanding national footprint, triple-digit revenue growth, and consistent positive EBITDA make this cannabis stock a sure-shot buy and hold for the long haul.