With the U.S. presidential election just months away, cannabis could be a hot button issue. For one, according to a recent Gallup poll, about 70% of U.S. adults say cannabis should be legal. Two, U.S. governors are strongly urging President Biden to reschedule cannabis, which could easily send cannabis stocks screaming higher.
In fact, in a letter, several governors said, “We hope that DEA will follow suit and reschedule cannabis to Schedule III this year, given that 88 percent of Americans are in favor of legalization for medical or recreational use. Rescheduling cannabis aligns with a safe, regulated product that Americans can trust.” Three, the inclusion of cannabis legalization on the ballot tends to bring out even more voters, added the Financial Times.
That being said, investors may want to consider cannabis stocks, such as:
Cannabis Stocks: Innovative Industrial Properties (IIPR)
The last time I mentioned Innovative Industrial Properties (NYSE:IIPR), I said, “Thanks to its 9% yield, which could push even higher, it’s cheap at $80 a share. Further, earnings are coming back strong.” That was on Nov. 14, as the IIPR ETF traded around $78 a share.
Today, it’s up to $98.50, with a yield of 7.39%.
Helping, IIPR just declared a fourth quarter dividend of $1.82 per share, payable Jan. 12, 2024 to shareholders of record at the close of business on Dec. 29, 2023. Even better, it knocked earnings out of the park, with third quarter funds from operations (FFO) of $2.09, which beat estimates by four cents. Revenue – up about 10% year-over-year (YOY) to $77.82 million – also beat expectations by $1.26 million.
NewLake Capital Partners (NLCP)
NewLake Capital (OTCMKTS:NLCP) has been one of the top, most explosive cannabis stocks, as well.
In fact, the last time I mentioned this one, I said, “Buy, hold, collect the yield, and simply wait for the market to improve. We also have to consider that we’ll eventually see a decrease in interest rates, which should boost REITs like NLCP.”
That was on Oct. 12, as NLCP traded at $13. It’s now up to $15.49, with a yield of 10.33%. It also just declared a dividend of 40 cents per share, payable Jan. 12 to shareholders of record as of Dec. 29. Earnings were essentially flat in its most recent quarter. But any weakness from that appears to have been priced in already.
Revenue came in at $11.5 million from $12.1 million YOY. Net income was $6 million from $6.5 million. And FFO was $9.6 million, as compared to $10.3 million YOY.
AFC Gamma (AFCG)
I also highlighted AFC Gamma (NASDAQ:AFCG) on Oct. 12, as it traded at $11.72. Now up to $12.29, it’s another one that could see higher highs with cannabis legalization efforts, and the potential for three to four interest rate cuts in the new year.
Helping, AFCG yields 15.76%, and just declared a quarterly dividend of $0.48, payable on Jan. 12, to shareholders of record as of Dec. 31.
While earnings were nothing to write home about, investors still like it at current prices. In its most recent quarter, the company posted net income of $8 million, which dropped about 50% from the second quarter. It was also down from $11.4 million YOY. However, AFCG did appoint a new CEO, Daniel Neville, effective Oct. 30, and it does appear that most of the negativity has been baked into the stock price.
Again, with the fight for legalization, and potential interest rate cuts in the new year, the AFCG REIT could see higher highs.
On the date of publication, Ian Cooper did not hold (either directly or indirectly) any positions in the securities mentioned. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
