Are you looking for some quality pot stocks to add to your portfolio that aren't incredibly overpriced and could be due to post some strong numbers this year? Two stocks you won't want to ignore are Cresco Labs (OTC:CRLBF) and Harvest Health & Recreation (OTC:HRVSF). Not only are these companies doing well, but investing in them won't cost you a hefty premium -- they are trading at cheap levels compared to some of their peers.

Both of these stocks are also in great positions to take advantage of some hot new marijuana markets, and investing in them today could set you up for some strong returns in 2021. 

Marijuana store sign.

Image source: Getty Images.

1. Cresco Labs

Cresco Labs is coming off an impressive 2020. Its sales rose 271% to $476.3 million, and adjusted EBITDA of $116 million came in at more than 24% of revenue.  And despite being a top multistate operator, investors aren't paying nearly as significant a premium for it as they are for other pot stocks. Here is how it compares to some of its peers when looking at price-to-sales (P/S) ratios:

CRLBF PS Ratio Chart

CRLBF PS Ratio data by YCharts

Cresco Labs is already cheap right now, but what's especially promising for investors is that it could soon become an even better buy. On Feb. 1, its Sunnyside dispensary in Phoenix got the green light from the Arizona Department of Health Services to start selling recreational marijuana. Arizona was one of four states that passed a ballot measure legalizing adult-use marijuana sales in November 2020.

A boost in revenue from its Arizona dispensary is one reason that the quarterly results the company will release on May 27 (for the period up until March 31) could look particularly strong. In April, Cresco also closed on its acquisition of Bluma Wellness, which will give it a strong presence in the hot Florida market, where it will battle for market share alongside Trulieve Cannabis and Curaleaf.

Further down the road, Cresco is also looking to expand its presence in its home state of New York. It currently has four Sunnyside dispensaries there, but after the state passed legislation to legalization recreational marijuana in March, CEO Charlie Bachtell said that the company will "look forward to deepening our position in the state ahead of adult-use sales commencing."

With strong top and bottom-line numbers and exciting new opportunities in Arizona, Florida, and New York that could propel its numbers even further, Cresco Labs is one of the better pot stocks you can buy right now. What sweetens the deal is its relatively low valuation compared to those of other multistate operators. Shares of Cresco are up 279% in the past year as of May 5 (while the Horizons Marijuana Life Sciences ETF has risen by 59%), but a strong earnings report this month could send the stock up even higher.

2. Harvest Health

Harvest Health trades at an even lower P/S multiple of 4.9. Like Cresco Labs, it too could do well in its upcoming quarter, as this Arizona-based cannabis company recorded its first revenue from the adult-use market in Arizona on Jan. 22. But with 15 locations in the state, it is in an even better position to benefit from what is already one of the hottest pot markets in the country. According to data from Leafly, Arizona generated more than $1 billion in cannabis sales last year, right in line with Illinois and slightly ahead of Michigan. Adding recreational marijuana sales into the mix will only send those numbers up even higher.

The company has also been carefully divesting certain assets in Arkansas, California, and North Dakota. And although investors may see it as a negative to be reducing operations, it can be a net positive if it makes the business more efficient and helps it produce stronger profits. In 2020, Harvest Health's revenue doubled to $231.5 million, and its adjusted EBITDA profit of $15.3 million was a big improvement from the $43.7 million loss it incurred in the previous year. Cutting down on assets and focusing on efficiency is a good sign that the business isn't wasting resources and that it is paying close attention to its operations.

Harvest Health's stock has done well over 12 months, rising by 196%. But with the company benefiting from a strong position in Arizona, it could be due for an incredible performance when it releases its latest quarterly results (which investors should look for later this month). It is expecting sales for the first three months of the year to top at least $87 million, which would be a 93% improvement from the prior-year period. And if it can continue to expand on its adjusted EBITDA profit, that will be a great sign that the changes and divestitures it has been making are paying off. A strong Arizona pot market could make Harvest Health a top-performing marijuana stock in 2021.

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.