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Sundial Growers (NASDAQ:SNDL) is an intriguing stock. Even though there are question marks surrounding the company’s future and its growth numbers aren’t good at all, its shares are up 115% this year — significantly outperforming the Horizons Marijuana Life Sciences ETF, which is up 55%. And while I can definitely see scenarios where Sundial’s stock could continue rising in value (and they all relate to M&A activity), I can also see many more where its share price crashes. 

It’s a risky investment, and rather than speculate on its future, there are three other pot stocks I would buy before even giving Sundial serious consideration. Planet 13 (OTC:PLNH.F), Trulieve Cannabis (OTC:TCNNF), and Fire & Flower (OTC:FFLW.F) are all stocks that are much better and safer buys for cannabis investors.

Cannabis plant.

Image source: Getty Images.

1. Planet 13

One of the reasons I love Planet 13 is for the simplicity of its operations. The company isn’t going out and trying to expand all over the world and acquiring businesses left and right. Instead, Planet 13 has been carefully building the largest dispensary on the planet in Las Vegas (“SuperStore”), and slowly moving out to other markets. That is not only a safer model, but also a more cost-effective one.

The company released its year-end results on April 5, and its sales of $70.5 million for all of 2020 grew 10.8% from the previous year. Its adjusted EBITDA profit of $8.9 million was down 12.7% from a year ago in what was still a strong performance for the cannabis company, despite shutdowns and lockdowns limiting the number of people who could visit its Las Vegas-based dispensary.

And co-CEO Larry Scheffler is optimistic that things will be even better moving forward, noting that the company generated record monthly revenue in March which totaled $9.7 million. Planet 13 also said its new SuperStore location in California is still on schedule to open this July, potentially setting up 2021 to be a blowout year for the business.

Year to date, shares of the pot stock are up 21%, but there is a lot more upside here once the economy recovers from the pandemic and both of Planet 13’s SuperStore locations are up and running at full capacity.

2. Trulieve Cannabis

Trulieve has been much more aggressive on expansion than Planet 13, but a lot of that has also been within just one state. As of March 18, it had 83 locations across the country — 78 of which were in its home state of Florida.

Focusing on one market makes it easier to keep costs down and manage supply. A company can’t transport pot across state lines since marijuana remains illegal at the federal level. And that means expansion into another state is going to involve either an acquisition or setting up operations there from scratch — typically companies go with the former, which can be very costly. But to tap into more growth opportunities, out-of-state expansion is inevitable, and Trulieve has been working on that of late.

On April 5, it announced it would acquire three dispensaries from Keystone Shops in Pennsylvania for $60 million. Last month, Trulieve also acquired West Virginia-based Mountaineer Holdings, which gives it a cultivation permit plus two more dispensary permits in that state (bringing its total to six). And Trulieve also commenced growing activities in Massachusetts. In total, Trulieve has licensed operations in six states.

The company released its most recent results on March 23 and reported that in 2020, its sales totaled $521.5 million and grew 106% from the previous year. And its adjusted EBITDA profit of $78.2 million for the period ending Dec. 31, 2020, was the 12th quarter in a row where the company was in the black.

Trulieve already has a great business, and expanding into new markets will help strengthen its numbers, making the stock an even better buy than it is today. Year to date, it is up more than 36%.

3. Fire & Flower

Fire & Flower is another pot stock that I always have a close eye on. Unlike the other two on this list, it is a top retailer in Canada. Investing in retail can be a safer approach because rather than worrying about crops and the quality of harvests, a company just needs to sell the end products. And what helps make Fire & Flower stand out from its peers is that it has convenience store giant Alimentation Couche-Tard as a key investor, which owns a 15% stake in the business. With a global presence, Couche-Tard likely has eyes on more than just the Canadian market.

In February, Fire & Flower announced it would license its brand to American Acres Managers for its dispensaries in California, Arizona, and Nevada. The Canadian retailer will also have the option to acquire the company when marijuana is legal in the U.S. and such a deal is possible to close.

At a market cap of $215 million, Fire & Flower is still a fairly small pot stock, but the potential is there for significant growth, especially if it expands south of the border. However, even if that doesn’t happen soon, the business is still a great one to invest in.

Over the past three quarters, Fire & Flower has generated 84.8 million Canadian dollars in revenue — a year-over-year increase of 147%. In its most recent quarter, for the period ending Oct. 31, 2020, it also posted an adjusted EBITDA profit of CA$1.2 million, which was a big jump from the $0.3 million profit it posted in the previous period.

Fire & Flower is one of the safer Canadian pot stocks to invest in, as it’s not only generating some great growth numbers but is making progress on its bottom line as well. With a low valuation, this is a stock Sundial investors should be focusing on instead as there is tremendous potential here, especially with Couche-Tard involved and helping guide the way forward.

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.