If you a growth investor who wants to earn some fantastic long-term returns, cannabis is an industry you shouldn't overlook. Analysts from Grand View Research project the global legal marijuana market will be worth more than $70 billion in 2028, growing at a compound annual growth rate of 26.7% until then.

However, that doesn't mean just any pot stock will be a good investment. It's still important to buy shares of companies that have been able to balance growth while maintaining strong bottom lines -- this minimizes the risk of future share dilution. Two businesses that fall into that category and could make you rich over the long term are Curaleaf Holdings (OTC:CURLF) and GrowGeneration (NASDAQ:GRWG)

Several people working in a greenhouse.

Image source: Getty Images.

1. Curaleaf

Curaleaf is among the industry leaders in the cannabis business. Its presence has grown significantly over the years -- today it has more than 100 dispensaries, more than double the 48 it had two years ago, and operates in 23 states, up from 12 in 2019. Since 2019, it has launched operations in Europe. The company hasn't been shy about expansion, and it is likely to hit the $1 billion revenue mark this year.

Over the past 12 months, its shares have soared more than 86%, outpacing the Horizons Marijuana Life Sciences ETF, which has increased by a more modest rate of 33%. But as well as Curaleaf's stock has performed thus far, more gains could be ahead. In its most recent earnings results, released on May 10 for the period ending March 31, the company said it raised $300 million to focus on and scale its operations in states that have recently legalized marijuana for recreational use. That includes New York and New Jersey, which passed legislation to permit adult-use pot this year -- two markets Curaleaf already has a presence in.

As Curaleaf expands its operations, the company's results will likely only get better. Here's how it has done in terms of the past four quarters when looking at both its sales and adjusted EBITDA -- what cannabis companies usually rely on as a kinder measure of profitability: 

Period Ending Total Revenue YOY Growth Rate Adjusted EBITDA
March 31, 2021

$260 million

170% $63 million
Dec. 31, 2020

$230 million

184% $54 million
Sep. 30, 2020

$182 million

195% $42 million
June 30, 2020

$117 million

142% $28 million

Data source: Company filings. YOY = year over year.

If Curaleaf can continue growing not just its revenue but its bottom line, there's little doubt that the stock can be a long-term buy that will make you rich over the years. 

2. GrowGeneration

GrowGeneration has produced even more impressive returns over the past year, with its share price skyrocketing 460%. The company has a distinct advantage over Curaleaf and other marijuana producers: It isn't directly involved in the plant business. That's important, because that means it doesn't need to worry about the federal ban on marijuana, and its products can cross state lines. 

The company only gives growers the tools they need to grow marijuana and other crops. The business had a fantastic 2020, with sales of $193 million increasing by 143% from the previous year. The company was profitable without even having to rely on adjusted EBITDA -- its net income was more than $5 million.

And during the first three months of 2021 it is continuing to post strong numbers, with sales hitting $90 million, nearly three times the $33 million it recorded in the same period last year. Net income during the period already totaled more than $6 million. The business is doing even better than expected, and has upgraded its guidance; GrowGeneration expects revenue for the year to fall within a range of $450 million to $470 million (when it released its year-end results in March the forecast was between $415 million and $430 million).

As of the end of Q1 the company had 53 hydroponic and garden stores across 12 states, more than double the 24 locations it had two years earlier. The business has been growing through acquisitions, and with a smaller footprint than Curaleaf's, there's ample room for the company to get even bigger than it is today. Earlier this year it announced that it was entering the Massachusetts market through the acquisition of Aquarius Hydroponics.

Despite its already impressive growth numbers, there's still plenty of room for GrowGeneration to expand. And if it can keep posting profits along the way, the stock will continue to rise -- and significantly boost your portfolio's value over the years.

 
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.