Investing In Cannabis Stocks In 2021
Are you looking to invest in marijuana stocks in May? At the current time, top cannabis stocks are trading at some of their lower price points so far this year. After reaching new highs in February the cannabis sector has continued to lose value in the market for over two months. In essence, this could be a good opportunity for investors to find cannabis stocks to invest in for 2021.
But one thing to take into account when dealing with marijuana stocks is that they are known to have significant swings in stock prices. Because vertically integrated marijuana stocks are known for volatility more investors prefer to day trade or swing trade using short-term investing methods. But there are opportunities for the long-term investor that have more stability in the market. Ancillary marijuana stocks are those pot stocks with companies that support the cannabis industry without touching the actual plant.
In many cases, these companies are growing alongside the cannabis market. In 2020 some of these leading cannabis stocks managed to deliver significant gains for investors. One example of this type of company is GrowGeneration Corp. (NASDAQ: GRWG). As a hydroponic supply and gardening center, the company has been growing rapidly across the US establishing its presence. Currently, the company has 52 gardening centers nationwide and plans on having over 60 locations before the year ends.
Better Cannabis Stocks For Long Term Investing
Generally speaking, these companies have shown more market stability and could be better options for long-term investing. In addition, some of these companies also provide a dividend to shareholders as an incentive for the long hold. In reality, long-term investing in the cannabis industry is predicted by analysts to have strong growth potential.
According to a BDSA report in the US legal cannabis sales surpassed $17.5 billion in 2020 growing 46% from 2019. In the future analysts expect global cannabis sales to reach $55.9 billion by 2026. Essentially this shows a significant growth in a five-year time frame for investors.
At the current time, some of these top marijuana stocks are trading at their lowest levels in 2021. For new investors, this could present an opportunity to establish a position in some of the best cannabis stocks to invest in at lower price points. With the intention of researching some of these companies a step further, we can look closer into their performance. For long-term investors, these pot stocks could be some of the top marijuana stocks to buy for the long hold in the cannabis industry.
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Marijuana Stocks To Watch:
- Innovative Industrial Properties, Inc. (NYSE: IIPR)
- Hydrofarm Holdings Group, Inc. (NASDAQ: HYFM)
Innovative Industrial Properties, Inc.
Innovative Industrial Properties, Inc. is one of the only real estate companies providing leasing properties solely to the licensed and regulated U.S. cannabis industry. At the present time, IIP owns 69 properties across 18 states in the United States market. On May 5th IIP released its first-quarter 2021 results with total revenues of approximately $42.9 million for the period. In comparison, this is an increase of 103% from the $21.1 million in Q1 of 2020.
Primarily, the company’s growth has been driven by the acquisition and leasing of new properties and additional improvements to existing properties resulting in higher base rent. For the long-term investor, IIP provides an attractive quarterly dividend that paid $1.32 per share on April 15th to shareholders representing a 32% increase over Q1 2020. Although IIP has been performing well for quite some time IIPR stock is down 5.49% year to date.
Closing on May 5th at $173.07 the stock is down 6.35% in the last 5 days. With a high in February of $222.08, IIPR stock could have future upward momentum. According to analysts at CNN Business, the stock has a 12-month median price target of $219.00 per share. Relatively speaking, this estimate would represent a 26.54% increase from current levels. For this reason, IIPR could be one of the best marijuana stocks to invest in for the long term.
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Hydrofarm Holdings Group, Inc.
Hydrofarm Holdings Group, Inc. is a distributor and manufacturer of hydroponics equipment and supplies for controlled environment agriculture. Recently becoming a publicly-traded company in 2020 Hydrofarms came in as a traditional IPO that saw substantial gains from its introduction. Currently, the company manufactures and sells high-intensity grow lights, climate control solutions, and has a large portfolio of branded products.
On May 4th the company announced it completed the acquisition of a premium nutrient maker Heavy 16. In its most recent earnings, Hydrofarm announced its Q4 2020 net sales increased 62.6% to $87.4 million. Additionally, gross profit increased by 190.5% to $16 million or 18.3% of net sales. Full-year 2020 net sales increased 45.6% to $342.2 million. Hydrofarms also gave a full-year 2021 outlook estimating 20-25% organic net sales growth and forecasting an adjusted EBITDA of $28-$31 million.
HYFM stock closed on May 5th at $63.78 up 6.14% in the last five days. In February HYFM reached a high of $95.48 and is currently up 21.30% year to date. According to analysts at Tip Ranks HYFM stock has a 12-month average price target of $86.00 per share. In essence, this would be an increase of 34.84% from its current trading levels. With this in mind, HYFM stock could have the potential for cannabis investors for the long term.
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