Jason Williams, contributing editor to The Wealth Advisory, picked Innovative Industrial Properties (IIPR) as his top investment idea for 2019. The stock has since risen 172%. Here's his update on the cannabis-related REIT.
I’ve got to say that I’m proud of the performance of Innovative Industrial. And a little humbled. But I’m not really surprised. When I picked this as my top conservative stock for 2019, it was trading around $45. And that was after gaining more than 100% in 2018.
I was certain that this was the cannabis stock that belonged in every portfolio. And after nearly 200% gains so far in 2019, my thesis remains the same.
The company is led by a team of real estate experts, and they are doing an impeccable job. Management keeps debt low by using secondary offerings to drum up cash for new acquisitions. The company’s properties are 100% occupied. And it’s got a juicy dividend that keeps getting bigger.
Cannabis companies need cash to grow, just like any other corporation. But they don’t have access to big banks and large lines of credit thanks to federal prohibition remaining in effect. Innovative Industrial provides that financing and frees up cannabis growers to expand their businesses.
All the leases are triple net so tenants pay taxes and maintenance fees. And they’re booked for terms of at least 15 years as soon as IIPR owns the new property. It’s a great strategy for any company and especially lucrative in the cannabis sector.
That’s why, even after such an impressive start to the year, I’m still convinced Innovative Industrial has much more room to run. I expect to see it hit the $200 per share mark before the close of 2019.
