Do you have $5,000? Buy These 3 Hot Pot Stocks Immediately

With Republicans in the House of Representatives recently enacting legislation to legalize marijuana at the federal level, the potential for a bipartisan framework is as close as it has ever been. While the patchwork of state-to-state efforts is sort of a temporary solution to a growing industry, it’s a poor substitute for cohesive national policies.

The recent South Dakota Supreme Court ruling rejecting a voter referendum to approve legalized marijuana is a case in point. Cannabis has been a tough market as a result, but three Motley Fool contributors think so Innovative industrial features (NYSE:IIPR), the Horizons Marijuana Life Sciences Index ETF (OTC:HMLSF), and Jazz Pharmaceuticals (NASDAQ:JAZZ) are currently top buys.

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Mastering the cannabis real estate and growth finance markets

Alex Carchidic (Innovative industrial features): When it comes to cannabis stocks with evergreen appeal, it’s hard to beat Innovative Industrial Properties.

IIP’s strategy is to build a real estate empire of cannabis growing facilities rather than growing marijuana for consumers to purchase. With a $51 million purchase of new real estate in California on October 18, the empire is growing month by month. But the game of Innovative Industrial is more than just buying real estate because to generate cash flow from its property it is necessary to find tenants to rent them out. And who better to occupy a piece of productive real estate than the company that sold it to IIP in the first place?

By buying spaces and then renting them out to the former owner in a so-called sale-leaseback transaction, everyone wins. Innovative Industrial picks up a new asset and the cannabis company gets a dollop of much-needed cash, which it can then use to expand its business.

Building consistently on rental income by purchasing new facilities is a business model that will never get old, at least until the marijuana industry gains access to more traditional sources of financing such as bank loans. And those rental incomes aren’t exactly small either. IIP’s third-quarter revenue grew 56.9% year over year, which management estimates will result in a total of $195.5 million by 2021.

Crucially, IIP also pays a juicy dividend that currently yields around 2.31%. While that return may not seem like a great deal, keep in mind that the dividend payment has increased from $0.35 per share in September 2018 to $1.50 per share in September 2021. If it continues to climb that insanely fast — and with its rental income Explode, it probably will – people investing in IIP will be on substantial returns in next to no time.

Image Source: Innovative Industrial Features.

Buy a benchmark

Eric Volkman (Horizons Marijuana Life Sciences Index ETF): In the ever-losing cannabis sector, some companies will eventually win, but many more will lose. Taking that into consideration, it makes sense to invest money in an investment that places informed bets on potential champions. A good one is the Horizons Marijuana Life Sciences Index ETF.

Horizons Marijuana Life Sciences is the world’s original marijuana stock exchange-traded fund (ETF), launched in April 2017, well before the formal launch of the recreational marijuana market in its native Canada, by the way. Being the original and still relatively strong, it is often used as a benchmark for the wider marijuana industry.

Although Horizon Marijuana Life Sciences is a Canadian security operated by a Canadian company, it has recently moved away from the many struggling companies in that country’s weed sector. On Nov. 19, the ETF’s once Maple Leaf-heavy portfolio contained just four native stocks in the top 10 holdings. The rest — except Ireland’s Jazz Pharmaceuticals — are American companies.

This is a credit to management, as the US market has much more potential than its saturated Canadian counterpart. While we should not expect complete, or even widespread, recreational decriminalization/legalization in the US in the short term, it is almost inevitable in the medium to long term. In addition, the US has nearly nine times the population of its northern neighbor.

And those American interests are also promising. Top of the pops for Horizon, accounting for more than 20% of the total portfolio, is the perennial weed sector star Innovative Industrial Properties. Not only is this real estate investment trust (REIT) one of the few consistently profitable marijuana titles, it also pays a regular quarterly dividend.

The other Horizon top 10 members flying the stars and stripes are specialty growing equipment suppliers Scotts Miracle-Gro, another profitable dividend payer, and the fast-growing GrowGeneration.

The Horizons ETF family includes a US cannabis title called — yes — Horizons US Marijuana Index ETF. This is intended to replicate the performance of its nearly eponymous US Marijuana Companies Index.

While it includes some potential winners — Real Cannabis for a, Cresco Labs for another — it’s a bit one-dimensional, because it’s focused solely on retailers. That’s why I prefer Horizons Marijuana Life Sciences from the couple.

More than a few investors do too; so far this year, Horizon Marijuana Life Sciences has outperformed top Canadian and US names like Cresco Labs by share, Curaleaf, and Aurora Cannabis. Once the legal environment in the US starts to improve dramatically, we shouldn’t be surprised if this sustainable ETF starts widening that gap more dramatically.

Image source: Getty Images.

His way to buying cannabis

Rich Duprey (Jazz Pharmaceuticals): Jazz Pharmaceuticals isn’t your typical marijuana stock as it comes from biotechnology, but the $7.2 billion acquisition of GW Pharmaceuticals earlier this year puts it firmly in the cannabis camp.

The merger gave Jazz access to Epidiolex, a treatment for two forms of childhood epilepsy, while also gaining Food and Drug Administration approval for use in the treatment of tuberous sclerosis complex, a rare organ disease. The basis of the therapy is cannabidiol (CBD), the non-psychotropic compound found in marijuana, and sales regularly exceed expectations.

Although the COVID-19 pandemic caused the start of new patients for Epidiolex to slow down somewhat, sales growth remains strong. Third-quarter revenue rose 21% to $160 million and is now close to half a billion dollars, putting it on track for potential blockbuster status. Four of the top five European markets (it is approved for use in more than 30 countries) fully reimburse Epidiolex. And with Phase 3 pivotal trials for the treatment of epilepsy with myoclonic-atonic seizures – the therapy’s fourth target indication – expected to begin in the first half of 2022, Jazz is on track to reach its goal of becoming a blockbuster. to have medicine on his hands.

The success of the CBD-based drug is supported by an existing billion-dollar drug, Xywav, the next-generation advancement of Xyrem, a treatment for sleep disorders. The FDA granted Xywav, which has been determined to be clinically superior to Xyrem, orphan drug designation and a seven-year period of exclusivity. Combined sales of the two drugs totaled more than $1.3 billion in the first three quarters of 2021.

Jazz also has a robust oncology platform that has generated over half a billion dollars to date.

At just seven times next year’s estimated profits, Jazz Pharmaceuticals looks cheap — Wall Street expects sales to nearly double by 2025 as it hits $4.4 billion, a net profit of $1.6 billion, a nearly sevenfold increase from the $238 million it produced last year.

That makes this marijuana stock one to consider buying now.