Top Cannabis Stocks In 2021
In 2021 marijuana stocks and the cannabis market have continued to show investors the growth potential in the sector. With most leading cannabis companies reporting significant revenue growth in 2020 and guidance for 2021 showing higher revenue the industry is expanding rapidly. In general, top cannabis stocks have shown some upward momentum so far in May. Next week many leading cannabis companies will report first-quarter 2021 earnings, and this could be a catalyst for the cannabis sector.
Recent BDSA data in March shows cannabis sales in most states are rebounding from a drop in February. Given that investing in cannabis stocks offers exposure to a high growth market more investors are looking for the best companies. One area that has significant growth potential is the US cannabis market. As more states legalize marijuana the industry is experiencing a period of rapid expansion.
In essence, this gives leading cannabis companies the ability to establish new market share in new areas. At the present time, there are many different ways to invest in the cannabis industry. Currently, more investors prefer to use short-term trading methods when dealing with the volatility of the cannabis sector. But there are areas that have shown more stability for the long-term investor.
Long Term Investing In Marijuana Stocks
In general, ancillary marijuana stocks have been some of the best-performing cannabis stocks in 2021. Because they don’t actually touch the cannabis plant most of these equities trade on the major US stock exchanges. As things progress for the cannabis industry these companies support the growth of the market.
From current trading levels, these marijuana stocks could deliver future short-term and long-term gains for investors this year. With this in mind, let’s take a look at 2 of the best cannabis stocks to watch to start the second week of May.
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Marijuana Stocks To Watch:
- The Scotts Miracle-Gro Company (NYSE: SMG)
- Innovative Industrial Properties, Inc. (NYSE: IIPR)
The Scotts Miracle-Gro Company
If you’re looking for a long-term investment in the cannabis market The Scotts Miracle-Gro Company has one of the leading nutrients and hydroponic supply companies in the cannabis industry. Scott’s wholly-owned subsidiary Hawthorne Gardening saw a sales increase of 66% in Q2 to $363.8 million. On May 5th Scott’s reported record second-quarter results with sales increasing 32% driven by strong volume growth in both major business segments. At the present time, the company’s lawn and garden products at its largest four retailers in the US have increased 20% from the same period the year prior.
Currently, Scotts provides a dividend yield of 1.07% and an annual dividend of $2.48 per share. This year company sales are expected to see 8-12% growth in 2021. For the first six months of fiscal 2021, the company reported sales of $2.58 billion a 47% increase from the $1.75 billion the year prior. For the same period, the Hawthorne segment has increased 68% to $673.2 million. Scotts now expects Hawthorne sales to increase 30-40% for fiscal 2021.
SMG stock closed on May 7th, at $244.11 up 22.58% year to date. In its five-year performance SMG stock has increased 258.04%. According to analysts at CNN business SMG stock has a 12-month average price target of $300.00 per share. In essence, this price target represents a 22.71% increase from current levels. With a decent dividend for shareholders and significant growth SMG stock could be one of the best marijuana stocks to add to your long-term portfolio.
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Innovative Industrial Properties, Inc.
Innovative Industrial Properties, Inc. is a real estate company providing leased properties solely to the licensed and regulated U.S. cannabis market. With 69 properties across 18 states, IIP has established itself with many leading cannabis companies in the industry. Releasing its first-quarter 2021 results with total revenues of approximately $42.9 million for the period the company saw an increase of 103% compared to the $21.1 million in Q1 of 2020. Primarily, growth continues to be driven by the acquisitions and leases of new facilities and improvements to existing properties resulting in higher base rents for tenants.
As an incentive for investors IIP paid a quarterly dividend of $1.32 per share on April 15th to shareholders representing a 32% increase over Q1 2020. Currently, the stock has a dividend yield of 3.02% and an annual dividend of $5.28 per share. IIP is reporting a 7.8% debt to total gross assets with over $1.8 billion in total gross assets. Most of the company’s leases are long-term contracts that lock in consistent revenue for years to come.
IIPR stock is up 21.23% in the past 6 months closing on May 7th at $184.73. Year to date IIPR stock is only up 0.87% relatively flat for the year. According to analysts at Tip Ranks IIPR stock has a 12-month average price target of $207.67 per share. This would represent a 12.42% increase from current levels. In February IIPR stock saw a high of $222.08 and has a 3-year total return of 486.35%. For this reason, IIPR stock could be a top cannabis stock for long-term cannabis investors in 2021.
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