Stock of the Week: A Unique REIT Giving the Gift of Green
Alpesh Patel|December 23, 2023
In our final Stock of the Week of 2023… we’re doing something we haven’t done before.
We’re looking not at an AI play (you know I’ve been big on AI this year)…
But at a real estate investment trust… that’s in a highly specialized market.
And it’s one that could bring a lot of green to your portfolio.
The company began trading only in 2016… but has a $2.5 billion market cap.
Sales are growing at a double-digit clip…
And it pays a healthy 8% dividend yield.
But what caught my eye is that the stock has absolutely tumbled since early 2022. But it just found a bottom and is now moving up.
The play here to is to get in as the stock makes up all that lost ground.
Get all the details on the company – including the ticker – in my latest video.
Click on the image below to watch it.
Hello, friends, and welcome to another Stock of the Week.
And I’ve tried to be a bit different with this one and not gone down the AI route, though I will talk about that in other broadcasts and other writings of course, because it’s just the biggest thing in town.
However, the Stock of the Week this week is Innovative Industrial Properties. It’s a real estate investment trust, a REIT, and I’ve not had one of those as a pick for a while.
They are focused on the acquisition, ownership and management of specialized properties leased to state-licensed operators for their – now, wait for it, this is where it gets interesting – regulated cannabis facilities. Yeah, well, it’s Christmastime. I just feel like we’re all in a happy, festive mood. But the point is, it’s not only a REIT, but it taps into that market as well.
Now, they completed their IPO all the way back in 2016, so it’s not a very old company.
And what was interesting about it is its market cap is $2.48 billion. Now, I’ve never cared what companies do. I care about the numbers. Its total revenue is $77 million in Q3, which is an increase on the same quarter last year. So, going in the right direction.
So let’s dive deeper into some of these numbers.
On my Alpesh Growth-Value-Income rating, it’s got an 8. And remember, that measures the valuation of a company, revenue growth, dividend yields… all of those factors, all the boxes we want to tick.
Forecast P/E ratio is 15.4, which isn’t too expensive. It’s not cheap, but it’s not too expensive.
Cash return on capital invested is 11%. Good. It’s at least above 10%. Remember, that’s an important factor created by Deutsche Bank, used by Goldman Sachs Wealth Management. And you can read more about it here.
Sortino is a little bit low. Now, remember, in my stock picks for my GVI Investor, that gives you a lot more depth, and our due diligence is very strict. This is a “tip of the iceberg” to give you a taster of some of the factors we look at.
Volatility is above 20%. I prefer it to be below, but it’s not too bad.
What caught my eye with this is it has tumbled back down to around the $65 mark from the $260 mark. It found a base and is now currently at around just shy of $90 and is on its way higher.
And, really, the play here is for it to continue making up some of that massive ground that it lost since January of last year.
So in two years, it lost a lot of ground, and we’ll see it make some of that up.
If you look at discounted cash flow, it looks undervalued as well.
So that’s why it caught my eye. And again, I was just trying to get away from yet another AI tech stock. There’ll be lots of those and lots of discussion for my GVI Investor followers. So don’t worry.
But something a little bit esoteric… and the numbers look largely good, which is why I wanted to show you this one.