Not everyone can invest directly in marijuana stocks. Last year, for example, according to Military.com, Department of Defense employees were warned that investing in marijuana companies could hurt an employee’s security clearance. Other private employers, particularly contractors that interact with the federal government, may have similar policies against such investing by employees…
One way to skirt that obstacle is by investing in companies that are only tangentially connected to the cannabis industry. Here are three stocks that, because of that layer of distance, may be safer for some employees to invest in. They may also be safer from a financial standpoint.
A green thumbs-up for Scotts Miracle-Gro
Scotts Miracle-Gro (NYSE:SMG), through its subsidiary, Hawthorne Gardening, provides cannabis companies with supplies for hydroponic and indoor growing. The company said it is seeing growing profits from Hawthorne, with the subsidiary showing a 60% rise in revenues in the second quarter; management predicts sales growth of 30% to 35% for Hawthorne for the full year. Hawthorne is on track for as much as $1 billion in sales this year, having achieved $428.8 million through six months.
That certainly hasn’t hurt share the price for Scotts, which is up more than 35% year to date and more than 40% over the past 12 months.
Innovative Industrial Properties is crucial to the cannabis industry
Innovative Industrial Properties (NYSE:IIPR), a real estate investment trust that concentrates on industrial buildings and greenhouses related to cannabis, has seen its stock rise more than 23% year to date. In the first quarter, the company said its revenues were $20.6 billion, a rise of 214% year over year. Its net income in the quarter of $11.5 billion was equally impressive, as it represented a rise of 248% over the same quarter in 2019.
Unlike most of the companies it leases property to, Innovative Industrial Properties has recorded four consecutive years of revenue growth and two consecutive profitable years. The company specializes in triple-net leases to marijuana companies, which means that its tenants pay all property expenses, including taxes, rent, insurance, and utilities.
In the past three years, the company has nearly doubled its quarterly dividend, now at $1.06 per share.
Constellation is betting that Canopy’s star will rise
Constellation Brands (NYSE:STZ.B) is best known for its Corona and Modelo beers, Robert Mondavi wines, and SVEDKA vodka, but it has a minority interest in Canopy Growth (NYSE:CGC), a Canadian medical marijuana company. With so many bars closed because of the coronavirus pandemic, Constellation said its sales were…
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