Bull Market Brings Opportunity: Investing $1,000 in 2 High-Growth Stocks

Bull Market Brings Opportunity: Investing ,000 in 2 High-Growth Stocks

The early months of 2024 have certainly brought a string of excellent market days for investors. With the S&P500 setting several new records so far in 2024, many investors are feeling increasingly optimistic about investing cash into stocks compared to several months ago.

Wall Street has a habit of falling into a bear market once every four years on average. But good news: in all cases, the market not only recovered, but ultimately reached new highs.

Bull markets tend to occur every five to six years on average, and they generally last much longer than bear markets. So, if you invest in great companies, hold on to them, and continue to invest through the ups and downs, you can enjoy the best and worst days of the stock market.

On that note, if you have $1,000 to invest right now, here are two fantastic companies to consider.

1. Innovative industrial properties

Innovative industrial properties (NYSE:IIPR) is something of a unicorn in the world of marijuana stocks because he doesn’t actually grow or sell weed. Instead, the company operates as a real estate investment trust (REIT).

Innovative Industrial Properties acquires cultivation facilities, distribution centers and other related real estate from state-licensed cannabis operators. It then leases these facilities back to operators under long-term agreements.

This model provides recurring rental income to innovative industrial properties and provides more efficiencies for operators by allowing them to focus on growing and selling marijuana.

It is important to note that the REIT only leases to operators in the medical cannabis sector, which is more regulated and benefits from much broader legalization nationwide than the recreational use market. As of this writing, approximately 90% of Innovative Industrial Properties’ portfolio is leased to multistate operators (MSOs), and approximately 60% of its tenants are publicly traded companies.

In 2023, the company reported revenue of $310 million and net income of $164 million. Both figures increased 12% and 5%, respectively, from 2022. Adjusted funds from operations – an important measure of REIT performance – for the year totaled $257 million, up 10 % compared to the previous year.

At the end of the year, the REIT had 108 properties in 19 states. Currently, 95.8% of its operating portfolio is leased through triple net leases, where the tenant pays most of the costs associated with maintaining the property in addition to the rent.

Another remarkable figure is the rent collection rate, which stood at 100% in February. The company also has a superior yield and a history of increasing its dividend over time. Its current yield of 7% is considerably higher than the average stock market trading. S&P500 (1.3%), and its dividend has increased by 300% over the last five years.

The cannabis market can be a risky place to invest money, at least until there is some measure of uniform legislation at the federal level. That said, the medical cannabis niche represents a large and growing potential market.

Innovative Industrial Properties operates an unusual model within this industry that lends itself to stable, recurring returns for the company and its shareholders. Investors might consider getting a piece of the action.

2. Alibaba

Alibaba Holding Group (NYSE:BABA) has had a volatile few years. Management changes, regulatory hurdles, a challenging macroeconomic environment, and a general slowdown in growth are just a few factors that have contributed to the stock’s decline. As of this writing, shares are trading down about 30% from a year ago and about 60% from five years ago.

Alibaba is the leader in e-commerce in China, which has the world’s second-largest economy behind the United States, according to the International Monetary Fund. China’s e-commerce market is expected to reach a valuation of around $4 trillion by 2027.

The company accounts for around 50% of China’s e-commerce market through a range of platforms including Alibaba, AliExpress, Taobao and Tmall. It is even increasingly present in groceries and fresh products with its Freshippo distribution chain.

Alibaba also has a strong presence in other lucrative markets, including cloud infrastructure services, digital media and entertainment. Alibaba Cloud controls about 40% of the country’s cloud infrastructure market. The company planned to take its cloud segment public, but abandoned that idea late last year, hurting its stock price.

China has seen some of the strictest COVID lockdowns in the world, so the gradual reopening of the economy has meant a deceleration in growth for a market leader like Alibaba. Chinese regulators also fined Alibaba $2.8 billion a few years ago in an antitrust case. In short, a series of factors have recently contributed to its difficulties, some of which are beyond the company’s control.

China’s economy is already experiencing a robust recovery. Alibaba will benefit from these headwinds diminishing, and enjoys a strong position in terms of market leadership and financials.

Overall revenue increased 5% to $37 billion in the most recent quarter, and the company ended the period with cash and investments of approximately $92 billion. For risk-tolerant investors, the massive growth opportunity that remains for Alibaba in several rapidly expanding markets could warrant a second look given its current valuation.

Should you invest $1,000 in innovative industrial properties right now?

Before purchasing shares of Innovative Industrial Properties, consider this:

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Rachel Warren has no position in any of the stocks mentioned. The Motley Fool posts and recommends innovative industrial properties. The Motley Fool recommends Alibaba Group. The Motley Fool has a disclosure policy.

A Bull Market Is Here: 2 Spectacular Growth Stocks to Invest $1,000 In Right Now was originally published by The Motley Fool

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