Top 3 Marijuana Stocks To Buy And Hold Over The Next 10 Years
Where will be the cannabis industry in a decade? You can bet it’s going to be a lot different than it is now. More states could legalize recreational cannabis for adult use and medical cannabis could be legalized nationally.
These prospects translate into enormous opportunities for investors from a long-term perspective. But what are the best ways to take advantage of these opportunities? Here are three top marijuana stocks to buy and hold for the next 10 years.
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Scotts Miracle-Gro (NYSE: SMG) may well be the most likely to be successful with the changes in the cannabis industry. During the Gold Rush, those who provided picks and shovels for gold miners generally benefited more than the miners themselves. Scotts is arguably the best pick-and-shovel cannabis stock on the market.
The Hawthorne segment of the company ranks as a leading supplier of organics and hydroponics to cannabis growers. Hawthorne has more than doubled in size in the past three years. With the continued expansion of the US cannabis market, the company may be able to generate strong double-digit percentage sales growth year over year.
You might think Scott’s gardening and lawn activity might be boring. However, the segment has generated sales growth of over 35% over the past three years. This level of growth, fueled in large part by the COVID-19 pandemic, is unlikely to be sustainable. Nonetheless, Scotts should be able to count on modest but steady growth in its consumer lawn and garden products over the long term.
Unlike many companies in the cannabis industry, Scotts is already profitable. It even pays a dividend that pays a little over 1%. Scotts Miracle-Gro may just be the safest stock of marijuana to buy and hold on the market.
Innovative industrial properties
Innovative industrial properties (NYSE: IIPR) stands out as another profitable company serving the cannabis industry. The company is a real estate investment trust (REIT) which focuses on providing real estate capital to cannabis operators.
It’s hard not to like the IIP business model. The company specializes in sale-leaseback agreements where cannabis operators sell their properties to IIP and then IIP leases them to the operators on long-term agreements. Cannabis operators have access to capital, while IIP gets a steady stream of income.
This approach has allowed IIP to achieve fantastic growth. Over the past three years, his earnings over the past 12 months have skyrocketed by over 1,000%. During this period, the IIP share price has climbed over 440%.
The company shouldn’t have a difficult challenge to complete more sale-leaseback transactions to fuel its growth. Just last week he completed its eighth deal of the year with a Michigan cannabis operator.
IIP also offers one of the most attractive dividends you will find in the cannabis industry. Its dividend yield is currently 2.9%. The company has more than quintupled its dividend payout in the past three years.
Are there any pure-play pot stocks that are great to buy and hold? Absolutely. Cresco Laboratories (OTC: CRLBF) looks like one of the best.
The multi-state cannabis operator (MSO) currently operates in 10 states. It has 32 cannabis retail stores and 44 retail licenses. Cresco is also the largest wholesaler of branded cannabis products in the United States.
While Cresco recorded 271% year-over-year sales growth last year, the company is still in its infancy. Cresco acquired Bluma Wellness a few weeks ago, giving it a presence in the fast growing medical cannabis market in Florida. He is also well placed to win in New York after the recent legalization of recreational marijuana.
Cresco’s valuation is more attractive than that of most of the other large American MSOs. With the continued expansion of the U.S. cannabis markets, this marijuana stockpile is expected to have plenty of room to function over the next 10 years.
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Keith Speights owns shares of Innovative Industrial Properties. The Motley Fool owns shares and recommends Cresco Labs Inc., Innovative Industrial Properties and Scotts Miracle-Gro. The Motley Fool has a disclosure policy.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.