Some of the best growth stocks in the cannabis sector tend are the least accessible. Many are trading on Canadian exchanges and listed on over-the-counter (OTC) markets, which some brokers, including Robinhood, don't have access to. For investors willing to pay the occasional fee and use more conventional platforms, investing in international and OTC stocks can reap huge rewards. Over the last 12 months, shares of Valens Company (TSX:VLNS)(OTC:VLNCF) and Planet 13 Holdings (CNSX:PLTH)(OTC:PLNH.F) are up 92% and 459%, respectively. Let's see what's behind these under-the-radar stocks' momentum.

Woman smoking cannabis in a hemp field.

Image source: Getty Images.

1. Valens Company

Valens is a pot grower with a sizable stake in Canada's cannabis 2.0 industry. Currently, its sales of cannabis-infused beverages, vapes, edibles, and concentrates account for just over 5% of all volume in the country.

The company also has a segment that is unlike any other in the marijuana industry. Valens partners with Thermo Fisher Scientific (NYSE:TMO) to provide third-party testing on harvested cannabis to meet standards set by Health Canada. Its laboratory can analyze samples' cannabinoid profiles, residual solvents, pesticide concentrations, and more.

Recently, Valens also made its entry into the U.S. cannabis market with the $40 million acquisition of Green Roads. The purchase price equates to approximately 1.8 times Green Roads' 2020 revenue. Green Roads is currently the No. 2 most popular CBD brand in the U.S., with over 7,000 wholesale locations and a 94% customer satisfaction rating. 

In 2020, Valens generated CA$83.8 million in revenue and CA$14.1 million in operating income less non-cash items (EBITDA). This year, it expects to increase its sales by 42.6% to $119.5 million. 

Despite its growth, Valens remains significantly undervalued. The stock trades at just 6.7 times revenue, a bit below the average valuation of 7.8 times revenue in the sector. It is also well-capitalized, with CA$49.3 million cash on hand and CA$9 million in debt. I'd highly recommend investors check out the growth stock, especially in the face of a pending NASDAQ listing.

2. Planet 13 Holdings 

Planet 13 Holdings has a peculiar yet wildly successful expansion strategy. It focuses on building cannabis megastores instead of opening up many smaller dispensaries. The company's namesake store is located in the Las Vegas Strip and is minutes away from many resorts and casinos. In addition to selling cannabis, the Planet 13 store hosts a coffee shop, restaurant, and interactive exhibits like an in-house production facility.

Due to strong tourist activity, Planet 13 Holdings brought in $10.7 million in revenue in April, which is equivalent to its entire second-quarter 2020 sales. Like Valens, much of Planet 13 Holdings' success is due to its wildly popular vapes, concentrates, gummies, beverages, and chocolates.

With business doing so great, the firm plans to open up eight more mega-dispensaries by the end of 2026. In June, the company will open its Santa Ana, California, superstore. The location is a short distance away from Disneyland.

Its stock seems expensive at thirteen times sales. However, that's a reasonable price to pay for a company on track to double its revenue this year. For marijuana investors willing to take on the inherent risks of the industry, I think Planet 13 Holdings is a great stock to add to your watchlist.

 
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.