Ancillary Cannabis Stocks Worth Monitoring in Mid-October 2023
The cannabis industry’s landscape is still changing at an incredibly fast rate as we approach mid-October 2023. The ancillary business has become a hotbed for investors looking to profit from the industry’s expansion as marijuana legalization spreads throughout the globe. Companies that give crucial services and goods to the cannabis industry, such as ancillary marijuana stocks, have been growing, providing special potential for investors. Cannabis sales have increased significantly in recent years, with estimates showing that they will reach $24.6 billion globally in 2022 and continue to rise sharply. Ancillary cannabis companies, from those specializing in technology and equipment to packaging and branding, are at the forefront of this transformative industry, presenting investors with diverse options to explore.
In October 2023, it’s critical to put risk management and technical analysis at the forefront of your plan when considering investing in top ancillary marijuana stocks. Because of how volatile these stocks may be, it is crucial to stay current on current market developments and prospective legislative changes. The inherent risks in the cannabis industry can be reduced with the use of effective risk management techniques, enabling investors to maximize their profits while limiting potential losses. Additionally, technical analysis tools can help investors in a volatile market environment make wise judgments by finding the best entry and exit points for short-term investments.
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Building a Strong Portfolio: Mid-October’s Ancillary Cannabis Stocks to Watch
- Innovative Industrial Properties, Inc. (NYSE: IIPR)
- Leafly Holdings, Inc. (NASDAQ: LFLY)
- Hydrofarm Holdings Group, Inc. (NASDAQ: HYFM)
Innovative Industrial Properties, Inc.
Innovative Industrial Properties, Inc. is a cannabis-focused real estate investment company in the United States. The company will soon have 8.7 million square feet of rentable space after receiving an extra 2.5 million square feet. Additionally, with an average lease duration of 16.4 years, most of these buildings are fully leased. The organization currently has 111 locations spread throughout 19 states. IIP had already spent $2.4 billion on property improvements by April, in addition to the estimated $227.1 million in rent payments. The company forecasts a significant growth in portfolio size in 2022 as a result of ongoing real estate acquisitions in Pennsylvania and Massachusetts.
Second Quarter 2023
Financial Results
- Generated total revenues of approximately $76.5 million in the quarter, representing an 8% increase from the prior year’s quarter.
- Recorded net income attributable to common stockholders of approximately $40.9 million for the quarter, or $1.44 per diluted share.
- Recorded adjusted fund from operations (AFFO) of approximately $64.0 million, or $2.26 per diluted share, increases of 6% and 5% from the prior year’s quarter, respectively.
- Paid a quarterly dividend of $1.80 per common share on July 14, 2023 to stockholders of record as of June 30, 2023. The common stock dividends declared for the twelve months ended June 30, 2023 of $7.20 per common share represent an increase of $0.70, or 11%, over dividends declared for the twelve months ended June 30, 2022.
IIPR Stock Performance
On October 13th, IIPR stock closed at $75.48, up 2.76% in the last five days of trading. The stock is trading in a 52-week price range of $63.36-$125.38, down 25.53% year to date.
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Leafly Holdings, Inc.
Leafly Holdings Inc. is the owner and operator of a platform that connects consumers to licensed retailers and cannabis brands while also giving users access to cannabis-related information. The business runs the most trustworthy platform for finding and buying cannabis goods from authorized retailers worldwide. Each year, over 125 million people use Leafly to learn about cannabis and buy it online from neighboring merchants. Customers can make knowledgeable purchase decisions thanks to the company’s extensive resources, which include technology and advertising services. This aids cannabis firms in luring new clients and retaining existing ones. Due to the online cannabis delivery service, the company developed when it opened its doors in California in May, customers may now buy cannabis directly from its website.
Second Quarter Financial Results
- Revenue was $10.7 million, down 11% from Q2 2022.
- Gross margin was 88%, consistent with Q2 2022.
- Total operating expense was $10.2 million, a 48% reduction from $19.5 million in Q2 2022, reflecting continued focus and discipline in operating efficiencies.
- Net loss for Q2 2023 was $1.4 million. Net income was $14.8 million for Q2 2022, which included a $24.4 million non-cash benefit from derivative liabilities.
- Adjusted EBITDA was positive $0.1 million compared to adjusted EBITDA loss for Q2 2022 of $8.4 million.
LFLY Stock Performance
LFLY stock closed on October 13th at $8.73, up 21.59% in the past five days of trading. In this case, the stock has a range of $4.68-$21.24 and is down 33.04% year to date.
Hydrofarm Holdings Group, Inc.
Hydrofarm is a leading independent manufacturer and distributor of branded hydroponics equipment and supplies for controlled environment agriculture, including grow lights, climate control solutions, growing media, and nutrients, in addition to a diverse portfolio of proprietary and innovative branded products. For more than 40 years, Hydrofarm has helped farmers grow more easily and profitably. The company’s goal is to provide products that help farmers, cultivators, and growers enhance the caliber, effectiveness, consistency, and speed of their growing endeavors.
Second Quarter 2023 Highlights vs. Prior Year Period:
- Net sales decreased to $63.1 million compared to $97.5 million.
- Gross Profit increased to $14.5 million compared to $7.3 million. Gross Profit Margin increased to 23.0% of net sales compared to 7.5%.
- Adjusted Gross Profit(1) increased to $17.0 million compared to $9.1 million. Adjusted Gross Profit Margin(1) increased to 27.0% of net sales compared to 9.3%.
- Net loss was $12.9 million compared to net loss of $203.3 million.
- Adjusted EBITDA(1) increased to $2.5 million compared to $(6.8) million.
- Cash from operating activities of $9.9 million and Free Cash Flow(1) of $8.3 million.
Updated Full Year 2023 Outlook:
- Net sales of approximately $230 million to $240 million.
- Adjusted EBITDA(1) that is modestly positive.
- Positive Free Cash Flow(1).
HYFM Stock Performance
HYFM stock closed at $1.10 on October 13th, up 2.80% in the last five days of trading. At present, HYFM stock has a 52-week price range of $0.6720-$3.25, down 29.03% year to date.
Navigating the Ancillary Cannabis Market: Stocks to Keep on Your Radar Mid-October
In conclusion, as we delve into the exciting opportunities offered by ancillary cannabis stocks in mid-October 2023, it is evident that the cannabis industry’s growth shows no signs of slowing down. With the expanding global legalization and the diverse array of products and services offered by ancillary companies, investors have a dynamic landscape to explore. By incorporating proper risk management and technical analysis into your investment strategy, you can navigate the unique challenges of this ever-evolving market and potentially reap the rewards that the cannabis industry has to offer.
Remember, staying well-informed, conducting thorough research, and keeping a close eye on the top ancillary cannabis stocks for your watchlist will be vital in making informed decisions and seizing opportunities. Whether you’re a seasoned investor or just starting to dip your toes into the cannabis market, these stocks are worth watching in the coming months as they continue to play a pivotal role in shaping the future of this burgeoning industry.
MAPH Enterprises, LLC | (305) 414-0128 | 1501 Venera Ave, Coral Gables, FL 33146 | new@marijuanastocks.com
