In the past year, we have witnessed a great number of shifts in the cannabis industry. During that time, many pot stocks have had to change to help keep up with market demand and shifts in legislation. But, in the past three weeks, the coronavirus has completely changed the way in which marijuana stocks are traded. Because of this, investors in the cannabis market are working to adapt their investment strategies to the current state of the industry.
The coronavirus has caused the market to shed billions in value in only the short period that it has been around. But, in the past week, we have begun to see small gains begin to creep back into the market. Many cannabis investors are stating that there are certain pot stocks that are showing value simply due to their bottom dollar prices. There are two types of investors in the cannabis industry. The first of those is the traders who swing trade and look for small or large short term gains. This type of trading is best suited for the short term volatility of the market which is what we are seeing in full swing right now.
The other type of cannabis trader is the one who trades off of the long term potential of the industry. These traders are better suited to finding short term value that could pay off in the long term. Both trading patterns are valuable, and both are adaptable to finding pot stocks to watch. These two pot stocks mentioned below are suited well for both types, but potentially more so to long term traders.
A Pot Stock With Ancillary Value
Scotts Miracle-Gro Inc. (SMG Stock Report) is in no way a pure-play pot stock. The company has made its fortune as a provider and producer of lawn care supplies. But, in the past two to three years, the company has made its foray into the cannabis market by virtue of hydroponic grow supplies. It supplies these products through its wholly-owned subsidiary, Hawthorne Gardening. Those who wish to grow cannabis but don’t have the proper supplies, can turn to Hawthorne to get advice and materials for growing indoor hydroponically grown marijuana.
With this subsidiary, the company has been able to push its overall sales up by as much as 95% in the past several quarters. Hawthorne has produced sales of around $200 million for its 2019 fiscal year. But, Scotts as a whole still has a lot of room for improvement in its business model. Because of this, it looks as though there is an opportunity for growth in this leading cannabis stock moving into the next few years.
This Pot Stock Had a Lot of Investor Attention
Innovative Industrial Properties Inc. (IIPR Stock Report) continues to be talked about across the cannabis market. The company is a REIT, which offers real estate services to those who wish to grow or process cannabis. In addition, many cannabis companies have a tough time getting capital to build out their production. Because of this, IIPR is an extremely valuable resource for those who are growing marijuana.
The company has as many as 54 properties across many states in the U.S. What’s really interesting is that the majority of its contracts are in the ballpark timeline of 15-20 years. This means that profitability for the company is extremely predictable for the foreseeable future. If all that doesn’t make it look like an attractive pot stock, the company pays a dividend with a yield of around 5.5%. As it continues to see extensive growth in the next few years, IIPR is further illustrating its potential as a pot stock to watch.