These top performers continue to show great potential for this year. Here’s all you need to know…
At the National Institute for Cannabis Investors, I know a lot of you have joined at different times, meaning not everyone sees our reports and research information at the same time.
That’s why, today, I wanted to give you a quick update on two cannabis investments I’ve previously talked about.
There’s a few reasons for that.
One of the companies in particular does not have a direct involvement in the marijuana industry. It’s something you could call a “backdoor play.” The other has a unique business model, and like the first pick, it doesn’t “touch” the plant directly.
Ultimately, I still think that they could make you money, so I wanted all of our members to be aware of these companies.
The Cannabis REIT
Innovative Industrial Properties operates as a real estate investment trust (REIT). That means Innovative acts as a landlord for cannabis companies.
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It’s really a unique marijuana stock, as the company doesn’t grow or sell cannabis. Since Innovative doesn’t “touch the plant,” the New York Stock Exchange was comfortable giving IIPR a listing. When I talked about this company on October 23, 2018, it was trading for $39.97.
At the end of last week, it was trading for $82.10 per share.
The markets are choppy right now, so this is a particularly interesting play because it pays a dividend.
The right dividend-earning stock can be a good defensive play during volatile times, and IIPR should also be a benefactor of an appreciating stock price.
We take a deeper dive into Innovative Industrial Properties with our free guide, which you can access right here.
Some banks are too afraid to work with cannabis companies, and that makes sense. It’s still illegal under federal law.
But Severn has decided to limit that risk by working with medical cannabis firms following state law.
One trend in Severn’s favor – not related to the marijuana industry – is an increase in bank consolidation. Analysts and many economists have been calling for larger banks to buy smaller ones for some time now, and it is finally beginning to happen.
In particular, regional banks want to become larger and are buying other regional banks as well as smaller banks. The reason is consumer driven. Consumers demand advanced services like mobile banking, fast mortgage turnarounds, and instant and personalized customer service. The technology behind all those services is expensive, and smaller banks have a hard time keeping up.
Severn is a logical consolidation candidate, with only six branches but a large market share in one of the richest counties in America – Anne Arundel County, Maryland.
Also, cannabis has been a big part of the turnaround story at Severn, particularly when it comes to profit growth. Cannabis-related deposits and loans were around 2% of Severn’s total deposits and loans as of September 30, 2018.
The stock was trading for $8.77 on March 14, and I expected it see a run up to $9.80 fairly soon. However, with the selloff in the broader market, the stock price has been a little all over the place, as you can see in the chart below.
Over time, though, I expect it could climb near its all-time high of $21.14 per share. Severn is also another dividend-paying stock. As of the end of last week, it paid out $0.12, which is a yield of 1.3%.
These type of opportunities that don’t quite fit our model portfolios don’t really come up often. I don’t want to talk about just anything that looks like a back-door cannabis play.
With that said, if anything interesting crosses my path, I’ll make sure you’re aware of how to profit.
Executive Director, National Institute for Cannabis Investors
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21 responses to “2 Cannabis Picks to Watch for the Remainder of 2019”
June 06 2019