4 Marijuana Stocks To Play The Green Rush In 2020
Zacks Investment Research | Dec 19, 2019 07:54AM ET
Marijuana stocks have been through their highs and lows so far this year. Despite being a fast-growing industry, supply issues in Canada have affected legal marijuana purchases of late.
High tax rates in some of the U.S. states as well as increase in black-market producers, especially in North America, have hurt sales. As a result, marijuana companies have been seeing a drop in operating margins across the board and have significantly lost value.
Demand and supply issues have also affected the marijuana industry. Vaping-related health issues have been a headache as well though no one can be certain that the hazards are mostly related to marijuana. And this means legalization of marijuana at the federal level is of utmost importance as it could drive legal marijuana sales.
Yet, the year 2020 could bring significant changes in the volatile marijuana industry. Market pundits are now hopeful about the industry next year. After all, the marijuana industry’s success is dependent on regulatory procedures.
Needless to say, marijuana legalization has started to ramp-up in several U.S. states. What’s more, legalization of marijuana in the state of Illinois in January could bring positive tidings for the marijuana industry. President Trump’s initiative toward full-scale marijuana legalization, in the meantime, might lead to the legalization of marijuana in more states.
Passing of the SAFE Banking Act is also a blessing in disguise. Per Rishi Malkani, cannabis expert and partner at Deloitte, “the SAFE Banking Act would allow marijuana companies to list on senior exchanges in the US, shifting the financial center of marijuana away from Canada and fueling American firms with financing.”
Despite all the hiccups this year, the marijuana industry is projected to be one of the fastest-growing industries over the next decade. Wall Street analysts forecast worldwide marijuana sales growth between $50 billion and $200 billion by 2030. Hence, looking at some of the stocks from this fast-growing industry for the next year doesn’t seem like a bad proposition.
Innovative Industrial Properties
Innovative Industrial Properties, Inc. (NYSE:IIPR) focuses on the acquisition, ownership and management of specialized properties leased to experienced, state-licensed operators for their regulated medical-use marijuana facilities. In this process, Innovative Industrial Properties is reaping the reward of rental income.
Innovative Industrial Properties is also improving its net operating margins through acquisitions. To top it, the company has a current yield on invested capital of 13.6%, which should help Innovative Industrial Properties recoup all its investments in five years.
Innovative Industrial Properties currently has a Zacks Rank #1 (Strong Buy). The company’s expected earnings growth rate for the next year is 80.9%, more than the Zacks Investment Research
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