Wall Street's initial post-election excitement over the potential for federal legalization of marijuana has long since worn off. These days, investors are largely back to looking at the business opportunities that specific cannabis companies represent. Instead of hoping that a rising tide will lift all boats, they're seeking marijuana stocks that can ride the wave for the long term.

Green Thumb Industries (GTBIF -1.60%), Cresco Labs (CRLBF -1.00%), and Trulieve Cannabis (TCNNF -3.33%) all qualify on that score, and at their current valuations, they appear to be discounted, offering investors even better chances for strong returns.

Jarred marijuana on $100 bills

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Buy Green to make some green

Eric Volkman (Green Thumb Industries): The future of the North American cannabis industry depends on U.S. legalization at the federal level. This is a key reason why pot company stock prices have generally fallen in recent months. Right now, Congress is focused on bigger issues, while on a state-by-state basis, the pace of pot law liberalization has slowed to a crawl. 

Make no mistake, with public support high and states hungry for the fresh tax revenues that cannabis sales would bring, the legalization train will keep rolling. But it might be some time before it starts to gain real momentum.

So the marijuana industry as a whole is moving into a much better space, and one company beautifully placed to take advantage is muscular multi-state operator (MSO) Green Thumb Industries. It's one of the largest and most important MSOs, with operations in 14 states, 16 manufacturing facilities, and licenses for 114 dispensaries. It also has a product portfolio consisting of six brands.

I particularly like Green Thumb's retail geography. The company's leading dispensary chain, Rise, has stores in nine states. These are either vibrant recreational markets at the moment -- its home of Illinois, for example, and Massachusetts -- newly liberalized recreational-use states (New Jersey), or those likely to sanction recreational consumption and sale before long (Pennsylvania and Ohio).

Thanks to that footprint and its sensible acquisition strategy, Green Thumb has done a good job cranking its revenue steadily higher. In the company's most recently reported quarter, it improved its top line by 85% on a year-over-year basis (to nearly $222 million), and by 14% from the previous quarter. A glance at its trailing revenue figures shows constant improvements from quarter to quarter.

Better, the company has managed to (cue shocked looks from jaded pot industry observers) not only post a GAAP profit on the bottom line, but to do so for four quarters in a row.

Admittedly, that result was at least partially due to fair value adjustments on equity investments -- a wonky modification to its accounting -- but it's still encouraging. More revealingly, the company has generated positive cash flow from operations for six quarters in a row -- no mean feat in the cash-strapped marijuana industry.

Green Thumb has already done a fine job of adding scale while not losing piles of money. Just think how much better it will be able to do once federal legalization finally arrives.

Man with laptop in marijuana grow room

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This undervalued stock won't be a bargain forever

Alex Carchidi (Cresco Labs): Cresco Labs is a wholesaler of branded medicinal and recreational cannabis products in the U.S., and it's expanding rapidly. 

In Q2, its quarterly revenue skyrocketed by 123.6% year over year, a growth surge fueled by a few recent acquisitions and strong demand. Wisely, it competes only in large state markets where it sees robust consumer demand paired with sensible cannabis regulations, such as California, New York, and Massachusetts. And, while Cresco isn't profitable right now, there's little to stop it from becoming profitable in the near term. 

As such, those who buy shares now won't need to pay the premium that they would for a profitable company, but they won't take on the substantial risks of investing in a cash-burning operation. 

When considering that Cresco has access to an estimated 63% of the customers in the U.S. market for cannabis via its retail outlets and distributor relationships, it seems like Wall Street isn't fully recognizing the company's potential for revenue growth. Competitors like Green Thumb Industries and Curaleaf sport trailing price-to-sales ratios of around 7, and some stocks like Sundial Growers are valued at multiples as high as 20. In contrast, Cresco's rock-bottom trailing price-to-sales ratio of 2.73 makes it dirt cheap.

Management's next steps will be to deepen the company's penetration into its existing markets by opening new facilities and performing additional bolt-on purchases of smaller businesses. Investors take note: As Cresco continues to gain momentum, its stock likely won't be undervalued for much longer.

Marijuana in prescription bottle

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A cannabis stock worth the trouble and the wait

Rich Duprey (Trulieve Cannabis). As hemp entrepreneur Benjamin Franklin once noted, "out of adversity comes opportunity." Investors who recognize the wisdom of that quip should take a close look at Trulieve Cannabis.

Shares of the multi-state operator (MSO) have declined by 27% year to date as the market has rotated away from growth stocks, but also because of legal problems associated with the husband of Trulieve's CEO, and that's where the opportunity lies.

Sector rotations happen all the time, but there's little question that the growth of the legal marijuana market represents a long-term trend. So far, 37 states and the District of Columbia have legalized cannabis to some degree, and there's a good likelihood it will be legalized federally sooner rather than later. That sea change, when it occurs, will swamp any technical trading trends.

As for the legal issues, they are completely unrelated to Trulieve Cannabis. The husband of CEO Kim Rivers, J.T. Burnette, was recently convicted on public corruption charges that included fraud and bribery, but the crimes were related to his property development business in Florida and had nothing to do with the MSO.

Obviously, it's not a good look when a top executive's spouse is found to be involved in shady dealings -- hence the pall this has cast over Trulieve. Yet there has been nothing to suggest the cannabis company is tainted in any way.

Trulieve is the largest MSO in Florida, and has begun investigating growth opportunities elsewhere. Its acquisition of fellow MSO Harvest Health & Recreation bolstered its presence in Arizona with 15 dispensaries. It now has a presence in about a dozen states with over 125 dispensaries operational.

The shadow hanging over Trulieve offers an opening for investors willing to bet that the market will eventually realize this vertically integrated MSO will not be derailed by the adjacent troubles. Admittedly, it may take a little bit longer for that realization to occur as even other states may become reticent about awarding licenses to it, or will scrutinize it even more closely than before, but that should actually work to Trulieve's benefit.

As legalization expands and states that now only allow marijuana to be used for medical purposes make recreational use legal as well, more paths to growth will open. In light of that outlook, Trulieve looks like a bargain cannabis stock now.