Just 4 months ago, we published an article on www.StockNews.com titled, “Is Now a Great Time to Buy Innovative Industrial Properties Inc.,” in which we shared our opinion that the drop in Innovative Industrial Properties (IIPR - Get Rating) was a buying opportunity.
At the time, shares of Innovative Industrial Properties were trading at about $72. Today, shares of the company are trading at about $105.
The reason Innovative Industrial Properties’ stock dropped in the fall of 2019 was due to the overall bearish tone in the cannabis markets, along with a big equity raise which had investors concerned about dilution.
Yet, since then Innovative Industrial Properties has made numerous acquisitions and actually raised twice the amount of capital that they did back in 2019.
At the beginning of 2019, the company owned just 11 properties, in 11 U.S. states where medical cannabis is legal. By the end of the fourth quarter of 2019, the company owned 44 properties in 14 U.S. states. As of February 14th, 2020, they own 47 properties located in 15 states. All of the properties are 100% leased under a long-term, triple-net lease agreement.
Innovative Industrial Properties has proven to investors that they know how to put their capital to work. It is expected that the company will continue to raise money to fund expansion, and as long as the acquisitions make sense, the company should continue to grow revenues.
And the fact that the company pays a hefty dividend makes this company appealing to a much wider investor base. Especially while most other cannabis companies are fighting just to achieve profitability.
From the last quarter’s results, Innovative Industrial Properties’s net rental revenue shot up 201% year over year to $11.2 million. This was driven by the acquisition of new properties, along with rental increases on specific properties. EPS also came in up an astounding 162% to $0.55 per share. This was a heavy beat for Innovative Industrial Properties which sent the stock up 10% after their earnings report.
Innovative Industrial Properties is set to report earnings next week on Wednesday, February 26, 2020. Though Innovative Industrial Properties carries a hefty valuation at current levels (its price-to-earnings ratio is 68.5), we are optimistic that we will see positive results and the company will give more clarity surrounding their long term plan. If they do, the stock could surge even higher.
IIPR shares were trading at $105.00 per share on Wednesday afternoon, up $2.69 (+2.63%). Year-to-date, IIPR has gained 38.39%, versus a 5.25% rise in the benchmark S&P 500 index during the same period.
About the Author: Aaron Missere
Aaron is an experienced investor who is also the CEO of Departures Capital. His primary focus is on the cannabis industry. He also hosts a weekly show on YouTube about marijuana stocks. Learn more about Aaron’s background, along with links to his most recent articles. More...
