What happened
Shares of Innovative Industrial Properties (NYSE:IIPR), a real estate investment trust (REIT) focused on the medical marijuana industry, popped 13.8% in October, according to data from S&P Global Market Intelligence. By comparison, the S&P 500 index returned 7% last month.
The likely catalysts behind the cannabis stock’s robust performance were the overall strength of the market and continued investor optimism about the company’s growth prospects. In addition, a state-specific development in the medical marijuana industry probably also provided a tailwind.
In 2021, shares of IIP (as the company is often called) have returned 49.7% through Nov. 2, compared to the broader market’s 24.7% return.
Image source: Getty Images.
So what
Innovative Industrial Properties didn’t release any market-moving news last month, nor does it appear that there were any Wall Street analyst rating upgrades of the stock. The company did, however, release news that should interest investors. On Oct. 1, it announced its operating, investment, and capital markets activity for the third quarter. It reported that it made four acquisitions in the quarter, one of which was land only. This news did not notably move the stock in either direction. That makes sense since the company issues a press release whenever it acquires a new property. In other words, the Oct. 1 announcement didn’t include any information that wasn’t already public.
We can probably attribute the stock’s solid October performance in part to a continuation of the momentum it’s enjoyed for some time. It also seems likely the stock got a boost from news that New Jersey expanded its medical marijuana program after a long delay. On Oct. 15, the Garden State’s Cannabis Regulatory Commission announced the recipients of 14 new medical marijuana licenses. The following week, shares of Innovative Industrial Properties, which already has a presence in New Jersey, rose 8.6%. https://www.nj.com/marijuana/2021/10/nj-announces-14-new-medical-marijuana-licenses-expanding-market-after-long-delay.html
Now what
Investors can expect material news soon. As of this writing, Innovative Industrial Properties hasn’t announced a date for the release of its third-quarter results, but it will probably be within the next week or two.
For this quarter, Wall Street is modeling for revenue to grow 53% year over year to $52.5 million and earnings per share to increase 35% to $1.16.
Among the higher-risk and volatile group of cannabis stocks, IIP is the best bet for investors who want to limit their risk. The company is a rarity in its industry because it’s both profitable and pays a dividend. On that note, the stock’s dividend yield was 2.25% as of the market close on Nov. 2.
This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium advisory service. We’re motley! Questioning an investing thesis — even one of our own — helps us all think critically about investing and make decisions that help us become smarter, happier, and richer.
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