Timothy Lutts — a leading growth stock expert — is the chief analyst and editor of the s...
Top Picks 2019: Innovative Industrial Properties (IIPR)
01/11/2019 5:00 am EST
The past year saw the legal cannabis market explode. Canadian cannabis stocks were the hot investment of 2018. And they went on a ridiculous ride, observes growth stock expert Jason Williams, editor of The Wealth Advisory.
Many went from their initial price offerings (IPOs) to $20 billion companies within a few weeks, and back down to the ground over the following months. So, it might seem odd that my “conservative” pick for 2019 is in the same industry. But it’ll all make sense when you hear what this company is doing and where.
Canadian cannabis is last year’s news. The U.S. is where the real money will be made in the future. Our industry is expected to reach $10 billion this year. And according to Marijuana Business Daily, it could get as high as $22 billion by 2022.
And it’s still illegal in the U.S. But over 30 states now allow medical marijuana use and seven states plus Washington, D.C., allow recreational use. And that will likely increase in 2019.
But there will be a lot of volatility out there. And there will be rallies fueled by speculation just like there were with the Canadian companies. So, you need an investment that’s immune to those kinds of wild swings but will still profit every time another state votes “yes.”
Innovative Industrial Properties (IIPR) is that kind of investment. It’s a real estate investment trust that owns marijuana cultivation and processing facilities and rents them to cannabis operations. The leases are triple net, which means that IIPR’s tenants pay all the bills, all the taxes, make the repairs, and pay rent to Innovative Industrial. That’s not a bad deal.
The stock is up by more than 100% since last year. It’s one of the best-performing cannabis stocks out there, now that the high-flying growers are coming back to earth. Plus, because it’s a REIT, it has to pay at least 90% of its pretax profits to investors. It’s like you’re getting paid every time someone gets high.
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