Unsurprisingly, the current year has been depressing for cannabis stocks. Regulatory headwinds continue to play spoilsport and making stock predictions somewhat difficult. However, some attractive cannabis stocks to buy hint at potential breakout on the upside.

First, even without legalization, one cannot ignore the immense addressable cannabis market. Some major companies have even been diversifying for growth, which is a likely catalyst for certain stocks trending higher.

Further, several attractive cannabis companies have stemmed the cash burn, making for an optimistic outlook for 2024 and 2025. As free cash flow turns positive, it opens the door for more headroom for investment without dilution concerns.

Any positive news on the regulatory front can add to the impending bullish momentum for cannabis stocks. Let’s discuss three cannabis stocks to buy that are likely to surge and enter 2024 on a positive note.

Tilray Brands (TLRY)

Tilray Brands (NASDAQ:TLRY) stock trades at $2.20 and looks massively undervalued. With several positive developments, TLRY stock seems poised for a strong reversal rally.

First reason for the bullish argument is the company’s diversification toward the beer and beverage business. With multiple acquisitions, Tilray is the fifth largest craft brewer in the U.S. The most prominent deal is the acquisition of eight beer and beverage brands from Anheuser-Busch (NYSE:BUD).

Strong presence in this staples segment is likely to help accelerate growth. And because of the acquisitions, Tilray has built a strong strategic infrastructure within the U.S. This will undoubtedly help make quick inroads into the cannabis market on potential federal level legalization.

Notably, TLRY reported strong Q1 2024 numbers. Revenue increased by 15% on a year-over-year (YOY) basis $177 million. The company maintains its guidance to deliver positive free cash flow for the year. Additionally, with a liquidity buffer of $466 million, the company’s financial flexibility remains high.

Cronos Group (CRON)

Cronos (NASDAQ:CRON) stock has felt recent lows of $1.64. However, CRON is quickly bouncing back above $2 levels. The stock remains deeply undervalued, and the positive momentum is likely to sustain.

Importantly, Cronos reported a cash buffer of $841 million as of Q2 2023. The company intends to use the buffer for aggressive growth in a cannabis legalization scenario. With the current market valuation of the company lower than the cash buffer, CRON stock is indeed undervalued.

In addition, Cronos has been pursuing cost cutting with an annual operating expense saving target of $20 to $25 million. The company has guided for positive net change in cash for 2024. As EBITDA margin improves, the stock is likely to trend higher.

CRON has been making the right moves in terms of business expansion. Recently, it launched its leading medical brand, Peace Naturals, in Germany. Europe is a big market for medicinal cannabis, and Cronos is superbly positioned to benefit.

Curaleaf Holdings (CURLF)

Curaleaf Holdings (OTCMKTS:CURLF) stock is trending higher by 55% in the last six months. The rally is likely to continue well into 2024.

For Q2 2023, Curaleaf reported muted revenue growth of 4% on a YOY basis to $339 million. However, the adjusted EBITDA margin was healthy at 21%. Impressively, Curaleaf has generated operating cash flow of $37 million for the first half of 2023.

Let’s look at reasons to hold bullish on the company’s growth in upcoming quarters. First, CURLF is expanding in Europe and has proven bullish in the German market. Curaleaf believes that Europe has a potential addressable market of $248 million.

Further, the company is investing heavily in research and development. This translates into a sturdy pipeline of innovative products that will ultimately boost growth. Curaleaf launched 171 new products in 2022, and 18% of the revenue was generated by new products launched in the last 12 months.

On the date of publication, Faisal Humayun did not hold (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.