The U.S. marijuana industry had a hard time on Wall Street last year, as there was no meaningful movement in Washington toward federal cannabis legalization. However, that doesn't change the fact that some cannabis companies are performing exceptionally well even within the limited legal state markets.

More state-level legalization in 2022 would mean more opportunities for pot growers and other companies associated with the cannabis industry. While a wide range of pot stocks are trading at bargain valuations now, in my opinion, these three look too exciting to miss.

A person looking at a marijuana plant in a marijuana field.

Image source: Getty Images.

1. Cresco Labs

Illinois-based Cresco Labs (CRLBF -3.96%) does not have a large national footprint yet. But its strategy of targeting limited-license markets like Illinois, Ohio, and Pennsylvania has worked in its favor. It has built a loyal customer base for its brands such as Mindy's Edibles and High Supply. Since cannabis is federally illegal, state regulators have placed tight restrictions on the number of licenses they will issue for cannabis businesses and are being cautious about which companies they'll issue them to.

Even with just 45 stores, Cresco's revenue growth is outstanding. It brought in $766 million in revenue over its last four reported quarters. In 2021's third-quarter (its most recently reported period), its consistent top-line growth produced $56 million in earnings before interest, taxes, depreciation, and amortization (EBITDA), up from $40 million in the prior-year period. Cresco benefited significantly from the cannabis boom in its home state of Illinois, which legalized recreational marijuana use in 2020. Total adult-use sales in the state -- where Cresco operates 10 dispensaries -- crossed $1 billion last year.

Cresco's management has guided for fourth-quarter revenue in the range of $235 million to $245 million, and adjusted EBITDA margin of 30% for the full year, and a gross profit margin above 50% for the rest of 2021. This would mean close to $1 billion in revenue for the full year, which is impressive for a small company. Recently, it opened its 15th store in Florida, which brought its nationwide store count to 49.

2. Columbia Care

New York-based Columbia Care (CCHWF 3.77%) also targets limited-license markets -- a strategy that's helping the $1.1 billion market cap company position itself to compete with the bigger players. The company operates 131 facilities, 99 of which are retail stores, in key cannabis markets such as Massachusetts, Ohio, Pennsylvania, Illinois, Maryland, and Virginia.

The company generated $396 million in revenue over its last four reported quarters, and in Q3 -- its most recently reported quarter -- it grew its top line by 144% year over year to $132 million, and its EBITDA by a remarkable 634% to $31 million.

However, Columbia Care's management believes some headwinds could hamper its fourth-quarter results -- among them, delays in the opening of stores in new legal markets. Hence, management now expects its full-year revenue to land in the range of $470 million to $485 million, adjusted EBITDA in the range of $85 million to $95 million, and for its adjusted gross profit margin to be about 46%.

Recently, it opened its second dispensary in West Virginia and plans to open three more this year. That state hasn't legalized adult-use cannabis yet, but Columbia Care is wisely establishing its footprint in strictly medical-use markets, which should give it an edge when and if the state does pass legislation allowing recreational use.

3. GrowGeneration

Hydroponics specialist GrowGeneration (GRWG 1.49%) makes much of its money by supplying cannabis growers with the equipment they need for indoor cultivation. The Colorado-based company sells hydroponics products and other equipment through 62 stores nationally, and it's firmly profitable. It brought in $393 million in revenue in the first nine months of 2021, compared to $131 million in the same period a year ago. Meanwhile, net profits surged from $3.8 million to $16.8 million.

GrowGeneration's management expects the same headwinds as Columbia Care to impact its fourth-quarter results. Additionally, management noted that a "general slowdown in the hydroponics market" was also putting pressure on it late last year. 

Thus, the company now expects Q4 revenues in the $420 million to $422 million range, and adjusted EBITDA in the $31.5 million to $33.5 million range.

As the industry expands, demand for GrowGeneration's products will increase, so investors can anticipate more growth ahead for this $493 million market cap company. 

These three stocks are too cheap to ignore

The marijuana industry is still evolving, so patience will be required for investors to reap the benefits. But growth stocks usually take time to show their full potential, and Wall Street analysts are optimistic about cannabis stocks. Based on analysts' consensus price targets, Cresco Labs, GrowGeneration, and Columbia Care have upsides of 111%, 125%, and 176%, respectively, over the next 12 months. All three are scheduled to report their fourth-quarter results in March. It will be interesting to hear what plans they have for 2022.

CCHWF PS Ratio Chart

CCHWF PS Ratio data by YCharts.

The recent market sell-off has driven each of these stocks to less than half of their 52-week highs. Moreover, they are cheaply valued, trading at price-to-sales ratios of less than 3, making this an opportune time to grab these exciting stocks.