You won’t find many of the best cannabis stocks listed on Robinhood‘s 100 most popular stocks list. Neither will you find many of these stocks becoming memes that are championed by online communities. So if you’re searching for the best cannabis stock to buy in August, you’ll have to look elsewhere…
I think there’s one candidate that stands above the rest — Innovative Industrial Properties (NYSE:IIPR). It’s not widely held by Robinhood investors. It’s not a meme stock. However, here are three reasons why IIP is the best cannabis stock to buy in August.
1. It’s highly profitable
Some cannabis companies play up that they’re generating positive adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA). That’s fine, but “adjusted” leaves a lot of wiggle room. And the total interest, taxes, depreciation, and amortization for the companies can be substantial.
Other cannabis companies report that they’re profitable. However, when you dig into the details, you’ll sometimes find plenty of smoke and mirrors. Tilray (NASDAQ:TLRY) is a great example of this with its recent fiscal fourth-quarter results. The company announced a profit of $33.6 million. However, all of that amount resulted from an unrealized gain related to convertible debentures. That gain was due to Tilray’s share price plunging in the quarter.
Innovative Industrial Properties is highly profitable — for real. The company, which provides real estate capital to medical cannabis operators, posted earnings of $25.6 million in the first quarter of 2021. IIP’s profit margin was nearly 60%.
How impressive is IIP’s profitability? Consider Trulieve Cannabis (OTC:TCNNF). It’s one of the most profitable U.S. multistate operators, which as a group are a lot more profitable than their Canadian counterparts. In the first quarter, Trulieve generated earnings of $30.1 million on revenue of $193.8 million. That’s a profit margin of around 15% — only a fraction of IIP’s profit margin.
2. It has tremendous growth prospects
IIP stock has outperformed many cannabis stocks over the last 12 months and over the last three years — including Tilray and Trulieve. That’s not surprising, since IIP’s revenue growth has also been much higher than that of most cannabis companies.
Even better, IIP still has tremendous growth prospects. The company simply has to find additional properties to acquire and lease back to cannabis operators. That isn’t too difficult a task.
Since the end of the first quarter, the company has completed four acquisitions of properties and…
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