Cannabis REIT Targets Promising New Market

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this week Marijuana market updateI am sharing with you one of the highest rated cannabis stocks in my cannabis power ranking system.

It scores a 97 overall in the system and ranks well in Momentum – a rarity in today’s cannabis market.

Real Estate Rebound Points for Cannabis REIT

First, let’s talk real estate.

We can look at the Real Estate Select SPDR Fund (NYSE: XLRE) to track the performance of real estate stocks.

The sector suffered a strong decline in June.

Although the Federal Reserve has raised interest rates to help combat rising inflation, the sector has turned things around.

Since the decline in June, XLRE has risen in the last three months.

This rise leads me to one of my highest rated cannabis stocks.

Cannabis Power Stocks: Zoned Properties Inc.

Zoned Properties Inc. (OTC: ZDPY) is a real estate investment trust (REIT) that owns, develops and leases properties for the cannabis sector.

It finds properties that cannabis operators can buy or lease for growing or retail operations.

ZDPY’s assets are primarily in Arizona, but it has properties for sale or lease in Michigan, New York and Nevada.

In 2021, the company reached a new milestone when it closed more than $50 million in commercial real estate transactions.

It has now shifted its focus from the Southwest to emerging cannabis markets in New York and New Jersey.

ZDPY Cannabis REIT is the highest rated

Looking at my cannabis potency rating system, we see ZDPY is ranked 97 overall.

We are “strong bulls” on this cannabis REIT and expect it to beat the broader market threefold over the next 12 months.

He gets a grade A 93 on our momentum factorBut he also gets an A grade 67 approximately.

For the value, we examine the company’s price-to-ratio ratios and compare them against the industry in which the stock is listed.

ZDPY has a price-to-sales (P/S) ratio of 4, compared to a broader REIT industry average of 5.15.

Its price-to-book ratio is 1.42, while the industry average is 2.05.

This tells us that ZDPY is undervalued compared to industry peers.

ZDPY price to sales ratio

Let’s get caught up on the movement of ZDPY’s P/S ratio.

In March 2016, the company traded with a P/S ratio of more than 58.

The ratio bottomed out in 2020 before rising slightly last year.

It is now sitting around 4, which means that ZDPY is an undervalued ret cannabis.

Investors may find the stock more attractive, which will push its price up.

Now let’s look at the momentum of Zoned Properties:

ZDPY stock momentum

At a time when most cannabis stocks are struggling, ZDPY is trending well.

The stock has taken off over the past 12 months, compared to its peers in real estate investments and services, which have fallen over the same period.

Even as the real estate market cooled, ZDPY was able to recoup much of the losses it suffered in May 2022.

From its low point earlier this year, ZDPY is up 22.8% as I write.

Note: In July, the company obtained a $4.5 million line of credit that it will use to invest and purchase additional rental properties for cannabis operators.

Overall, I like the REIT market, especially in the cannabis space.

I was talking about Innovative Industrial Properties Inc. (NYSE: IIPR ) and I’m throwing ZDPY into the mix here.

These cannabis REITs have a solid business plan.

They develop properties for cannabis operators, then sell or lease them back to those operators for an overall profit or consistent income stream in the form of lease and rent payments.

Cannabis REITs like ZDPY and IIPR look for specific properties they know clients are looking for, virtually guaranteeing a sale or lease agreement.

The Bottom Line: In a low cannabis market, these REITs are a nice bright spot.

One more thing: Any questions? You can get money and markets by sending me, Adam Odell or Charles Sizemore a question that we will use in each of our videos. Just send us Your questions and feedback.

MAM hat tease

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All these series are on our YouTube channel.

Also, you can follow me Twitter (@InvestWithMattC), where I will give you even more insights, not only in the cannabis market. You can also check out my new one Daily Power Stock Series on the Money & Markets website. Every day I give you a new stock that I expect to outperform the market based on our proprietary Stock Strength Rating system.

safe trading,

matt clark 2

Matt Clark

Research analyst, money and markets

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