Finding a good business in the cannabis industry that is consistently profitable is no easy task. Finding one that is also cheap is even more difficult. But there are a couple of gems out there that can provide investors with some great bang for their buck while also providing them with incredible long-term growth opportunities.

You will be hard-pressed to find better-valued pot stocks right now than MariMed (OTC:MRMD) and Trulieve Cannabis (OTC:TCNNF). Both companies are profitable (on an adjusted earnings before interest, taxes, depreciation, and amortization, or EBITDA, basis), and both have excellent growth potential.

Stack of cash with marijuana leaves.

Image source: Getty Images.

1. MariMed

At a market cap of about $230 million, MariMed isn't one of the larger cannabis companies out there. But there's loads of potential here, especially as the company comes off a stellar fourth-quarter and full-year 2020 earnings report. Year-end results released March 23 showed revenue of $20.4 million, nearly quadruple the $4.2 million it recorded in the prior-year period. Its adjusted EBITDA was a positive $7.7 million, versus a loss of $16 million a year earlier. And for the full year, cannabis sales totaled $50.9 million, while adjusted EBITDA was $16.3 million.

Given its market cap, MariMed is trading at a very attractive 14 times adjusted EBITDA. To put that into context, this is how it compares with some of the bigger names in the industry:

Company Market Cap 2020 Adjusted EBITDA Multiple
Cresco Labs $2.7 billion

$116 million

23
Green Thumb Industries $6.3 billion

$179.6 million

35
Curaleaf $9 billion

$144.1 million

62

Source: Company filings.

Investors aren't paying much of a premium at all for MariMed. One of the benefits of investing in a smaller business like this is that because the company isn't as popular and well-known as a big name like Curaleaf, there is less fanfare around it, which makes its value less likely to be inflated. And there is good value here; in 2021, MariMed anticipates another strong performance with revenue doubling to $100 million. It is expanding its presence in multiple states, including Maryland, Delaware, and Massachusetts.

In the past year, shares of MariMed are up more than 360% while the Horizons Marijuana Life Sciences ETF has risen by a more modest 68%. But the great news is that it's still not too late to buy MariMed -- its valuation remains attractive, and it could be one of the more underrated buys in the sector right now. 

2. Trulieve

Trulieve is a far larger player than MariMed, having generated a whopping $521.5 million in revenue last year. Its market cap of $4.6 billion also puts it alongside the industry leaders. But despite its high valuation, you may be surprised to learn that Trulieve is still an attractive value buy. Its adjusted EBITDA in 2020 was $251 million -- nearly half of its total revenue. With such strong margins, it's no surprise that it belongs on this list as it trades at only 18 times its adjusted EBITDA.

I've long been a fan of Trulieve's model because it goes against the grain. Rather than aggressively pursuing every possible opportunity out there, it has built up its operations in Florida, dominated the market, and then started making a push into other states. Although it technically has a presence in six states, 81 of its 86 dispensaries are still in its home state of Florida. And it's hard to argue with that approach given that at $1.3 billion in medical cannabis sales last year, Florida is one of the top three markets in the entire country, even though the state has yet to legalize recreational marijuana.

Trulieve's management team has shown discipline in their expansion efforts, so it is no surprise that the company's operations reflect that, with expenses under control and growing revenue. Trulieve may not be the market leader in terms of revenue (Curaleaf's $626.6 million last year puts it well ahead), but it is definitely one of the best-run cannabis businesses around. If you are looking for a multistate operator to put in your portfolio, Trulieve is one stock you won't want to overlook.

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.