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Green Thumb Industries (OTC: GTBIF) has only pulled back slightly in the months following last April's short-lived run-up among marijuana stocks. Yet while the shares have held fairly well, don't assume this means the stock is fairly priced at present levels.

Rather, considering Green Thumb's operating performance and other fundamentals, it's arguably a stronger choice among investors bullish on eventual regulatory clarity regarding U.S. federal law and the commercial sale of cannabis products.

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While most popular cannabis stocks are based in Canada, Green Thumb is based in Chicago and ranks as one of the more high-profile multistate operators (MSOs). MSOs own and operate marijuana businesses licensed at the U.S. state level. While Canada-based operators, still limited in their ability to enter the U.S. market, continue struggling to reach profitability, MSOs like Green Thumb have already demonstrated consistent profitability.

Green Thumb, for instance, has reported GAAP profitability since 2020. Alongside a demonstrated track record of profitability, the company has a catalyst in place that could significantly increase profitability going forward. Earlier this year, Green Thumb renegotiated its licensing deal with 50%-owned Rythm (NASDAQ: RYM). Now that it is paying a flat licensing fee for Rythm's trademarks rather than a set percentage, the company has greater operating leverage. This could produce the sort of earnings growth that enables shares to double from current prices.

Alongside the aforementioned strengths are a few more that could prove key in driving its shares' next big move higher. For instance, Green Thumb is one of several MSOs that have received a conditional license, permitting it to operate within Texas' upcoming legalized medical cannabis market.

The company also continues aggressively buying back stock, recently increasing its share repurchase program ceiling by $100 million, equivalent to around 6% of its total share count. Even as the stock seems pricey at 38.8 times forward earnings, Green Thumb's perfect storm of bullish catalysts suggests that analysts underestimate the company's further profitability. Again, if you want exposure to the marijuana legalization trend, MSOs like Green Thumb remain the stronger choice.

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Thomas Niel has no position in any of the stocks mentioned. The Motley Fool recommends Green Thumb Industries. The Motley Fool has a disclosure policy.

Is Green Thumb Stock Oversold? The Case for 100% Upside. was originally published by The Motley Fool