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If you are looking for stocks that you can buy and hold for many years, it is important to choose companies with high quality businesses and strong growth catalysts. One industry that receives a lot of attention from investors of all ages and trading styles is the marijuana industry.
As more states have legalized pot for medical and recreational purposes, growers, retailers, and ancillary suppliers have emerged on the right and left. Legal cannabis sales in the United States increased by almost 50% in 2020. And the global legal marijuana market is on track to reach a valuation of nearly $ 71 billion as of 2028.
Not all pot stocks are good investments. Some of the marijuana companies that have garnered the most hype from investors just don’t have the financial means to keep up with the excitement they’ve generated. But there are some great stocks in the pot sector that investors with a buy and hold perspective shouldn’t hesitate to jump into right now. The following three stocks are such companies.
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1. GrowGeneration
GrowGeneration (NASDAQ: GRWG) is an interesting piece in the marijuana arena because the company doesn’t actually sell cannabis. What he sells is a huge assortment of just about all the farm supplies a farmer would need to grow and harvest marijuana. GrowGeneration currently operates 62 garden centers in the United States, with a strong focus in key markets including California and Colorado.
As you can imagine, the explosive growth the marijuana industry is experiencing has translated into fantastic revenue and profit for GrowGeneration. Stocks have risen more than 50% in the past year alone, and just under 1,000% since the stock went public less than five years ago.
In the most recent quarter, the company reported that its revenues jumped 190% year-over-year and net profit by 161%. Over the past five years, the company has increased its annual sales and net profit by 143% and 303%, respectively.
GrowGeneration has ample leeway to expand its operations and generate more profit from new and existing operators across the country who rely on its garden centers to get product from the greenhouse to the dispensary. This is a stock that still has plenty of room to skyrocket, and it’s a great game in the marijuana space for investors of all risk tolerances.
2. Jushi Holdings
Jushi Holdings (OTC: JUSHF) owns and operates a chain of dispensaries, retailers, and cannabis cultivation and production facilities across the United States.
The company usually acquires new facilities and dispensaries, and it closed its purchases in Massachusetts and Nevada in September. The company also opened its 15th retail store in Pennsylvania in September, a medical state where cannabis sales are expected to reach as high as $ 925 million in 2021.
Jushi’s revenue jumped 220% in the second quarter of 2021 year over year. The company’s net income improved by nearly $ 32 million from the net loss of about $ 27 million in the first quarter despite a number of recent expensive acquisitions. This brought its second quarter net income to $ 4.8 million.
The stock is up about 75% from 12 months ago, and Wall Street believes the company could have upside potential of up to 160% in the coming year. If you are a more risk averse investor, you can easily pick up stocks under $ 5 each while maintaining the stock as a smaller position in your portfolio.
3. Innovative industrial properties
If you are an income-seeking investor looking for a pot stock that has a history of strong growth and an equally bright future, Innovative industrial properties (NYSE: IIPR) certainly hits the mark on all requirements.
The stock pays a dividend that pays 2.36% at the time of writing, and because Innovative Industrial Properties is a real estate investment trust, it is legally required to pay a minimum of 90% of its taxable income. to its shareholders in the form of dividends. While Innovative Industrial Properties’ revenue and profits have grown year over year and quarter over quarter, its dividend has also increased (the most recent dividend increase was an astounding 28% year over year. ‘other).
The company leases its rapidly expanding portfolio of properties to licensed medical cannabis producers. He has an impressive list of clients who rent facilities ranging from California to New York. These include names well known in medical cannabis like Green thumb industries, Truly, Cresco Laboratories, and my previous pick, Jushi Holdings.
This year, Innovative Industrial Properties recorded an increase in revenues of 103% in the first quarter and 101% in the second compared to the same quarters in 2020. Its net profit jumped 122% and 124%, respectively, over the course of the year. of these two quarters. And for an even more accurate assessment of the REIT’s earnings over the past two quarters, its Adjusted Funds From Operations (AFFO) jumped 116% in the first quarter and 104% in the second quarter.
In the world of pot stocks, numbers like these don’t grow on trees. Investors who wish to inject growth into their portfolio should definitely consider innovative industrial properties for a long term investment.
This article represents the opinion of the author, who may disagree with the “official†recommendation position of a premium Motley Fool consulting service. We are heterogeneous! Challenging an investment thesis – even one of our own – helps us all to think critically about investing and make decisions that help us become smarter, happier, and richer.
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