Small-Cap Stocks: Finding the Perfect One

Numbers are everything when it comes to investing.

Source: Flickr

So, I stick to the numbers.

I believe that the proof is in the numbers and that a careful study and analysis of the numbers can help us find stocks with growth potential and big gains in the future while avoiding stories and mumbo-jumbo.

InvestorPlace - Stock Market News, Stock Advice & Trading Tips

An excellent example of this is Innovative Industrial Properties, Inc. (NYSE:IIPR), which has been rocking and rolling for months now. Founded in late 2016, IIPR is the only publicly traded REIT that services the pot industry. Company management partners with experienced cannabis growers in the 33 U.S. states that have adopted medical-cannabis programs. The REIT purchases and manages cannabis growers’ real estate properties, which allows them to focus solely on production and helping patients receive treatments.

I recommended IIPR back in April to my Breakthrough Stocks subscribers. Not because of stories about the potential in the marijuana industry, but because of the numbers.

You see, I have a proprietary 8-point system that determines if a stock is an urgent buy, or what I like to consider as a “Quantum A” stock. It must have strong sales growth, operating margin growth, earnings growth, earnings momentum, earnings surprises, analyst earnings revisions, cash flow and return on equity.

Ultimately, I want the stock’s Total Grade, which are the fundamentals and buying pressure blended together, to be A-rated. This makes it a strong buy. I will not recommend a stock that is rated lower than an A. That was just the case with IIPR.

Not Just Another Marijuana Stock

From June 2018 to March 2019, the company had topped analysts’ expectations. Sales were also strong. At the time of my recommendation, IIPR had achieved rental revenues of $4.7 million, up a whopping 111% from the same quarter a year ago. Adjusted funds from operations (AFFO) surged 344% year-over-year to $3.6 million, or $0.38 per share. For fiscal year 2018, total rental revenue soared 127% year-over-year to $14.3 million, up from $6.3 million.

During the first quarter, revenues soared 146% year-over-year to $6.6 million, and earnings surged 266.7% year-over-year to $3.3 million, or $0.33 per share. For the second quarter, the consensus estimate calls for 146.2% annual revenue growth and 129.4% annual earnings growth.

There’s an extra benefit that IIPR offers. Because it’s a REIT, it’s required to return at least 90% of its taxable income to shareholders in the form of dividends. This REIT has paid a dividend for eight-consecutive quarters. Even better, just last Friday IIPR raised its dividend from $0.45 per share to $0.60. This represents a 33.33% increase from last quarter and a 140% increase from a year ago. Shareholders of record of June 28 will receive the dividend on July 15.

Since my recommendation in April, the stock has hit a series of new 52-week highs and is is sitting pretty with about a 60% return on my Breakthrough Stocks Buy List. In fact, just today it popped over 7% to a fresh 52-week high of $137.78. I don’t expect the stock to slow down anytime soon, though. Currently, the stock holds a “B” for its Fundamental Grade, an “A” for its Quantitative Grade and an “A” for its Total Grade. So, it’s still a strong buy even after its recent run.

These are the types of stocks, and potential returns, my proprietary systems are always on the lookout for. And I believe I can make them work for you, too.

In fact, I just found two stocks that are urgent buys, and will be releasing their names next Tuesday, June 25. I don’t want you to miss out, so I strongly recommend that you sign up now so you can get the full details. I’ll also give you my special report, Four New “Quantum A” Stocks That Can Soar 500% or More. These all hold that coveted A rating and are excellent buys to get started with right now. Click here to sign up today .