By George Leong, B.Comm. Revealed : February 8, 2023
IIPR Inventory Represents a Lengthy-Time period Alternative
Marijuana shares briefly attracted buyers’ consideration following the 2022 mid-term elections, when Maryland and Missouri voters accepted legalizing leisure hashish. Whereas federal decriminalization of leisure pot has but to materialize, the White Home will pardon individuals who have been convicted of easy possession of marijuana. This can be a step in the proper route.
Sadly, hashish shares have failed to realize traction. The ETFMG Various Harvest ETF (NYSEARCA:MJ), a marijuana exchange-traded fund (ETF), declined to its report low of $4.02 on December 28, 2022. The ETF has rallied by about 12% since then, however I don’t anticipate any sustained will increase, given the present macroeconomic setting.
Among the greatest pot corporations have begun delivering optimistic earnings earlier than curiosity, taxes, depreciation, and amortization (EBITDA). Just a few of them are additionally worthwhile. They’ve a protracted approach to go, however the long-term outlook for pot shares is bullish.
Buyers might select to build up shares of marijuana shares on their value weak spot, however there’s additionally an alternate approach to play the expansion of the marijuana sector. Take into account Modern Industrial Properties Inc (NYSE:IIPR), an actual property funding belief (REIT) that leases properties within the U.S. to regulated medical hashish corporations.
Modern Industrial Properties inventory takes the guesswork out of getting to choose shares of particular marijuana producers or retailers. Furthermore, IIPR inventory at present pays quarterly dividends of $1.80 per share, for a yield of seven.9%.
Shares of Modern Industrial Properties went on a powerful run from $14.50 in December 2016 to its report $288.02 in November 2021. This translated right into a wholesome compound annual progress price (CAGR) of about 80%.
In January 2022, Modern Industrial Properties inventory failed to carry its trendline assist, falling to key assist round $82.0 previous to its current rally. At this level, the inventory is down by about 60% from its excessive and seems to have shaped a base at $82.00.
In February 2022, a demise cross sample surfaced on Modern Industrial Properties Inc’s inventory chart when IIPR inventory was buying and selling round $220.00. A demise cross happens when the 50-day shifting common (MA) breaks under the 200-day MA.
Chart courtesy of StockCharts.com
The demise cross sample stays in place, nevertheless it may very well be on the verge of reversing. If Modern Industrial Properties inventory’s 50-day MA breaks above its 200-day MA—and its relative energy and shifting common convergence/divergence (MACD) strengthen—IIPR inventory might goal $116.30 and $130.32.
An enormous upside transfer might drive Modern Industrial Properties inventory towards $170.00. The draw back threat with Modern Industrial Properties Inc is $82.00.
Chart courtesy of StockCharts.com
Modern Industrial Properties Inc’s Financials Enhance
Modern Industrial Properties’ revenues rose by 3,096% from 2017 to their report $204.5 million in 2021. Its usually accepted accounting ideas (GAAP) diluted earnings per share (EPS) additionally rose considerably from 2017 by 2021.
| Fiscal Yr | Revenues (Thousands and thousands) | GAAP Diluted EPS |
| 2017 | $6.4 | -$0.13 |
| 2018 | $14.8 | $0.75 |
| 2019 | $44.7 | $2.03 |
| 2020 | $116.9 | $3.27 |
| 2021 | $204.6 | $4.55 |
(Supply: “Modern Industrial Properties Inc.” MarketWatch, final accessed February 7, 2023.)
The corporate hasn’t reported its full-year 2022 financials but, however its rolling 12-month revenues to September 2022 jumped to $264.8 million.
For 2022, Modern Industrial Properties Inc expects to beat the consensus estimate of $275.5 million in revenues. That may be a year-over-year enhance of 4.7%. For 2023, analysts estimate that the REIT’s revenues will probably be $291.1 million. (Supply: “Modern Industrial Properties, Inc. (IIPR),” Yahoo! Finance, final accessed February 7, 2023.)
Analyst Take
I view Modern Industrial Properties Inc’s present share-price weak spot as a contrarian funding alternative.
The corporate has been rising its revenues, it’s worthwhile, and it pays out high-yield dividends. Due to this fact, IIPR inventory is an efficient approach to play the expansion of the marijuana business.
