What’s the best cannabis value to buy in August?
Investors are targeting cannabis sector which is booming. The increase in EBITDA Among the values is the perfect hook. But Innov Inds REIT, in addition to this, it has outperformed other stocks in the last three years. Not forgetting that it has excellent growth prospects with an attractive and fast-growing dividend, according to Keith Speights in The Motley Fool.
Some cannabis companies play that they are generating positive adjusted earnings before interest, taxes, depreciation and amortization (EBITDA). That’s ok but “tight” leaves a lot of room for maneuver. And the total interest, taxes, depreciation, and amortization of businesses can be substantial.
Other cannabis companies report that they are profitable. However, when you dig into the details, you will sometimes find a lot of smoke and mirrors. Tilray is a great example of this with its recent fiscal fourth quarter results. The company announced a profit of $ 33.6 million. However, all that amount resulted from an unrealized gain related to convertible bonds. That gain was due to the decline in Tilray’s share price in the quarter.
Innovative Industrial Properties is highly profitable, really. The company, which provides real estate capital to operators of medical cannabis, Registration Profits of $ 25.6 million in the first quarter of 2021. The profit margin It was almost the 60%.
How impressive is the profitability of IIP? Consider Trulieve Cannabis. It is one of the most profitable multi-state operators in the US, which as a group are far more profitable than their Canadian counterparts. In the first trimester gender Profits of $ 30.1 million about income of $ 193.8 million. That’s a profit margin from around the fifteen%, just a fraction of IIP’s profit margin.
Your growth prospect
IIP stocks have outperformed many cannabis stocks in the last 12 months and in the last three years, including Tilray and Trulieve. That’s not surprising, as revenue growth has also been much higher than that of most cannabis companies.
Even better, you still have huge growth prospects. The company simply has to find additional properties to acquire and lease from cannabis operators. That is not too difficult a task.
Since the end of first trimester, the company has completed four property acquisitions and has modified leases with three tenants to make improvements. Now owns 72 properties in 18 states. There are many growth opportunities in these existing markets. And there is plenty of room to expand to the other 17 states that have legalized medical cannabis.
What will happen to prospects if a major cannabis reform at the federal level In the USA.? You may have more competition from traditional banks and potentially other real estate equity companies entering the market. However, there is an even greater chance that the market will grow enough that the federal cannabis reform will be a positive net result for the IIP.
“Remember also that you are only focused on the medical cannabis market at the moment. I suspect that the company could choose to expand its network to include the recreational properties of cannabis if marijuana is decriminalized at the federal level, ”says Speights.
The company is organized as a real estate investment trust (REIT). That means that IIP must return at least the 90% of your income taxable to shareholders in the form of dividends.
The firm has increased its dividend payment by a huge 300% for the past three years. Your dividend now pays close to 2.7%. The only reason the return isn’t higher is that the stock price has skyrocketed.
Those dividend payments add up. IIP’s total return, including dividends, for the past three years is more than 630%, while their shares have appreciated more than 560%.
“No action is a sure thing. However, with its high level of profitability, strong growth prospects and a large dividend, IIP is much closer to achieving that ideal than most cannabis stocks, ”Speights concludes.