More and more countries are likely to follow the trend of legalizing medical marijuana. The truth is that there is plenty of competition among growers, and that a few cannabis companies are showing a profit. Consequently, this unprecedented year was tough for these stocks as the Alternative Harvest ETF MJ which tracks the whole industry is down more than 23% year to date.
But there are plenty of growth opportunities ahead. And here are three stocks that can make good use of this trend.
Innovative Industrial Properties – All The Positives Of Investing In Cannabis
There is one marijuana stock that's up and it is Innovative Industrial Properties Inc IIP. It is a fast-growing, real estate investment trust that was founded in 2016. Moreover, it is the first company on the New York Stock Exchange to provide real estate capital to the medical-use cannabis industry. When it comes to cannabis-related stock, it is a rare find with safe and high yields. It simply does a good job at capturing the benefits of investing in the industry. Most importantly, it has solid fundamentals that resulted in both revenue and profit growth.
In the second quarter, revenue increased 183% year-over-year as it amounted to $24.3 million. As for the net income of $13 million, it is even more impressive considering it is 263% more than during the same period in 2019. Now, it has 14 consecutive quarters of increased revenue and 12 consecutive quarters of increased earnings to fall back on. Since April, the company purchased eight properties which amount to 775,000 square feet of space. On September 1, it announced it closed on the acquisition of a property in Michigan. Its portfolio now has 62 properties in 16 states comprising over 4.7 million square feet -- 99% is its properties are under a long-term lease.
While some of the company's renters have seen business fall because of the pandemic, Innovative Industrial Properties said all of its renters paid what they owed from April to July, not counting one Los Angeles company in receivership. Its tenants are the VIPs of the industry, including Curaleaf Holdings Inc CURLF, Trulieve Cannabis Corp TCNNF, Cresco Labs Inc CRLBF, and Green Thumb Industries Inc GTBIF.
Moreover, the company keeps expanding its portfolio with new buildings and tenants. Since dividend was introduced in 2017, dividend payout was raised by more than 600%. Naturally, its price has climbed more than 60% year-to-date but growth opportunities will directly increase with market expansion.
Hemp Inc – Ground-Breaking Milestones Ahead
Back in August, Hemp Inc HEMP surpassed $2 million in sales from its premium, high quality hemp flower. The company expects to hit ground-breaking milestones quarterly with other products that are yet to come. Its CEO, Bruce Perlowin reported a frustrating first quarter filled with disruptions but also encouraged investors that the company is going full speed ahead. Global leader in the industrial hemp industry started a mass marketing campaigns so the company is certain it will have revenue in the millions to report for the third quarter and beyond. As a part of its bold strategy, Hemp was focused on growing and processing a high CBD hemp grow in Southern Oregon, and the fruits of its labor started blooming in the second quarter.
Research and Markets reported the global industrial hemp market is projected to grow from $4.6 billion in 2019 to $26.6 billion by 2025. This forecast implies a CAGR of 34%. Additionally, the Brightfield Group predicts the smokable hemp flower market will be valued at $70.6 million this year which is a drastic increase when compared to 2018's $11.7 million.
KushCo Is Well Positioned With Its Global Footprint And Range Of Products
Despite seeing its revenue drop almost by half, KushCo Holdings Inc KSHB has been able to successfully cut costs dramatically in order to sustain itself while attempting to move towards positive EBITDA. The recognized and respected provider of ancillary products and services to the legal cannabis and CBD industries represents an ideal partner for companies such as XS FINL INC/SH XSHLF. XS is a specialty finance company that leases equipment to cannabis and hemp companies in the U.S. It entered into a strategic partnership with KushCo on January 31st this year. On September 2, its CEO had nothing but praise for its associate. He said that XS hse been able to take advantage of additional lead generation through KushCo's extensive network, positioning the company to collaborate with a high-quality customer base resulting in larger leasing agreements with the potential for more business in the future. Besides being a reputable brand with a global footprint, KushCo has a diverse range of cannabis-related products under its belt.
2020 took a toll even on the mightiest. But there are plenty of growth possibilities in cannabis, especially as more and more medical studies are being conducted to prove its efficiency. Data Bridge Market Research forecasted that the global market for medical marijuana is expected to have a 20% compound annual growth rate through 2027. The above companies are well-positioned to benefit from this growth.
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