The markets have been shaky of late again as earnings season has been off to an underwhelming start. In the past month, the S&P 500 has fallen by more than 5% and since the start of the year it is down more than 10%.
Some stocks have been taken a bigger hit than others. For income investors, one worth paying close attention to right now is Innovative Industrial Properties (NYSE:IIPR). The real estate investment trust (REIT) is one of the safer investments in the cannabis industry. Its focus is securing licensed growers as tenants, which, in turn, gives the tenants some valuable cash flow through sale-and-leaseback agreements.
Innovative Industrial is now in oversold territory, having fallen an incredible 24% in just the past month. There was no terrible earnings performance or reason for the sharp decline in value. But that's precisely why investors should take a second look at the stock. The REIT's yield is now up to 4.4% and the stock itself is trading around its 52-week low.
The company reports earnings next month and this has historically made for a solid business. In each of the past five quarters, the REIT's profit margin has normally been 50% or more of revenue. And in 2021, sales of $205 million rose 75% from the $117 million that Innovative Industrial reported in the previous year. With more states legalizing marijuana, and New Jersey being the latest to commence adult-use sales, there could be even more demand for growing space in the not-too-distant future, giving Innovative Industrial lots of runway to achieve even more growth in the future.
