Innovative Industrial Properties (IIPR)
Innovative Industrial Properties (NYSE:IIPR) is an internally managed real estate investment trust (REIT), focusing on the acquisition, ownershi, and management of regulated state-licensed cannabis facilities. IIPR stock dipped 47.6% since the beginning of the year to $138.47, slightly underperforming the cannabis sector.
The REIT recently reported first-quarter 2022 results, posting a 50% revenue growth, a 36% net income increase, and a 40% adjusted funds from operations (AFFO) advance from the prior year’s quarter. Going forward, the consensus of analysts expect IIPR to expand at a fast clip. The top line is projected to jump 40.5% in 2022 to $288 million, whereas net profit should advance faster, up 47.8% year-on-year to $167 million. With these developments, Innovative’s profit margin is estimated to increase by 290 basis points to 58%, a level slightly higher than REIT industry’s average.
While the cannabis-exposed REIT is one of the most profitable marijuana stocks in our selection, it is also the most expensive. IIPR stock exchanges at a forward EV/EBITDA of 14.5x and has a 2022e ratio of 21.4x. . Yet, investors seeking exposure to marijuana stocks should consider buying this cannabis REIT on the dip, given that it is well-positioned to deliver steady gains in an inflationary environment.
Canopy Growth (CGC)
Canopy Growth (NASDAQ:CGC) is a world-leading diversified cannabis, hemp and marijuana device company, with a 10% market share in the Canadian market. CGC stock is down 40.32% year-to-date to $5.92 per share, as investors ran away from pot stocks in this volatile equity environment.
CGC’s top line is estimated to slow this year, as net sales are expected to shrink moderately down 9.2% to CAD 551 million, due to declining Canadian cannabis sales. Yet, the company is streamlining costs and anticipates achieving profitability in Canada by “taking additional steps to simplify its business and optimize expenses,” while making strategic investments in key growth areas.
If these plans go by the book, CGC stock could see significant tailwinds, as the nascent industry remains profitless. Besides, analysts are expecting CGC stock to turn a profit this year, posting a net profit of CAD 182 million ($141 million), representing a high-profit margin of 33.1% per year.
Canopy Growth trades however at a premium in terms of P/E ratio, posting a forward ratio of 15.2x, but has a more attractive 2022e EV/Revenue of only 5.29x.
Verano Holdings (VRNOF)
Verano Holdings (OTCMKTS:VRNOF) is a leading vertically integrated cannabis operator in the United States, operating over 1,118,000 square feet of cultivation across 15 production facilities.. VRNOF stock lost 40.76% of its market capitalization since the beginning of the year and is now trading at an all-time low of $7.5 per share.
The marijuana stock has robust fundamentals and is expected to turn a profit this year, boding well for its stock price. After growing at a hefty pace, up 222.3% to CAD 738 million in 2021, net sales are estimated to expand by 31.8% to $973 million this year, offering a comfortable operating margin of 27% on the year. Besides…
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