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So-called meme stocks have a very bad reputation among experienced investors, and for good reason. However, Tilray (NASDAQ:TLRY) stock is one meme stock that is much more than a pump-and-dump scheme.

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I recently wrote a story comparing meme stocks GameStop (NYSE:GME) and AMC Entertainment (NYSE:AMC). I got a lot of grief for my belief that both AMC and GameStop are terrible long-term investments. But just because most meme stocks are garbage investments doesn't mean all of them are.

TLRY stock skyrocketed from under $10 to as high as $67 in a matter of weeks in early 2021. Since that social media-fueled trading frenzy, Tilray shares have pulled back to under $11. They are now down 36% in the past six months alone.

I wouldn't recommend buying the dip in most meme stocks. But there are several reasons why investors shouldn't lump TLRY stock in with the rest of the meme stock pump-and-dumps.

TLRY Stock Merger Synergies

Tilray's high-profile merger with Aphria closed in May. The Aphria merger creates unparalleled scale for Tilray among Canadian cannabis stocks. It also creates cost synergies that play an important role in Tilray's important march to earnings before interest, taxes depreciation and amortization (EBITDA) profitability.

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"We anticipate multiple expansion as the potential Tilray/Aphria merger would enable the combined company to build scale, gain efficiencies, combine their cash position, and deliver consistent positive EBITDA," Bank of America analyst Heather Balsky wrote in a research note.

Tilray has estimated the merger will create $80 million in synergies. In the first half of 2021, the company had realized only $55 million of those synergies, Balsky estimated.

"We assume a benefit starting in [the second half of the fiscal year] now that the company has turned through legacy-Tilray inventory," she wrote.

Bank of America has a "buy" rating and $15 price target for TLRY stock.

International Growth Opportunities

Today, Canadian cannabis companies are primarily focused on growing revenue and market share in Canada. Canada legalized cannabis back in 2018. Up to this point, pricing and growth in the Canadian market has been a big disappointment for investors.

In the years following Canadian legalization, Aphria focused on flower and vape sales. Lately, the company has expanded into edibles. By contrast, Tilray has focused on an asset-light model centered on developing consumer brands with meaningful pricing power.

Aphria also had a large international distribution business, something that differentiated it from many Canadian cannabis peers. For now, Canadian growth is lagging. Federal cannabis reform in the U.S. has disappointed. International demand outside of the U.S. may be the best growth source for Canadian cannabis stocks like Tilray. In that sense, Aphria could be a critical growth source in the near-term.

U.S. Expansion Opportunities

If no for the legalization issue, the U.S. cannabis market would be the biggest and best opportunity in the North American cannabis market. Unfortunately, cannabis remains federally banned in the U.S. All Canadian cannabis companies can do is prepare to enter the U.S. market when and if legalization occurs.

Tilray took a major step in that direction in August when it acquired convertible notes representing a potential minority stake in U.S. multi-state cannabis operator Medmen Enterprises (OTC:MMNFF).

Morningstar analyst Kristoffer Inton says Tilray's decision to issue undervalued shares to fund the Medmen investment wasn't ideal.

"Nevertheless, we still see the deal as a net positive, accounting for about $1 to our fair value estimate while giving Tilray a toehold into the attractive U.S. market upon a change to federal law, which we view as likely by the end of calendar year 2023," Inton wrote in a research note.

Inton says the U.S. market has the best growth potential of any global cannabis market.

"We expect federal law will eventually be changed to allow states to choose the legality of cannabis within their borders," he says.

Morningstar has a "buy" rating and $17 fair value estimate for TLRY stock.

How To Play TLRY Stock

If you were trading TLRY stock as a meme stock in February, it's a completely different investment these days. It may not be trending on social media. It may not have bullish momentum. And it probably won't make you rich overnight.

But if you are looking for a high-quality play on a high-risk market like cannabis that has massive long-term growth potential, TLRY stock is a top-tier cannabis stock to buy on the dip.

On the date of publication, Wayne Duggan did not have (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.

Wayne Duggan has been a U.S. News & World Report Investing contributor since 2016 and is a staff writer at Benzinga, where he has written more than 7,000 articles. Mr. Duggan is the author of the book "Beating Wall Street With Common Sense," which focuses on investing psychology and practical strategies to outperform the stock market.

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