“Greedy when others are afraid” is one of the most popular Warren Buffett quotes investors are familiar with. Well, with recession fears and rising inflation, it might be time to add to stocks. Valuations plummet whether stock fundamentals are good or not. And for investors who can afford to hold for several years, now could be a good time to buy.
Some of the stocks that look incredibly promising today include, among others innovative industrial real estate (IIPR -1.52%) and meta platform (Meta 0.94%). I’ve already bought one of these bargains this year, but both look like solid buys. Here’s why investing $10,000 in one of these stocks could generate thousands of profits for you in a year or two.
1. Innovative industrial properties
What I really like about Innovative Industrial Properties (IIP) is that it gives investors the opportunity to receive a high dividend without sacrificing growth potential. It has a high yield of 6.3% (the S&P500 Average 1.7%) and it’s not affordable. The Real Estate Investment Trust’s free cash flow has grown over the years and is enough to support its dividend payments:
Fundamental chart data from YCharts.
The company also offers some long-term growth potential as the cannabis industry expands into new states. At the end of June, it had 111 properties in its portfolio with 8.6 million leased square feet in 19 states. IIP is well positioned to help cannabis growers expand in the industry through its sell-and-lease agreements.
IIP’s net income for the trailing 12 months totaled $121 million, more than half of revenue ($226 million) for the period. The strong margins, promising growth opportunities, and high dividend make IIP one of the best stocks to buy right now.
Though pot stocks have lost more than half their value this year, the marijuana market hasn’t been strong as a hole-in-one, Horizon Marijuana Life Sciences ETF 45% fall in the same period. Buying IIP stocks today can set investors up for big gains in a couple of years.
2. Meta Platform
While I wasn’t convinced by the company’s transition to the Metaverse, I bought shares in the Meta platform earlier this year. It’s the company’s business that looks impressive today, not the company that may or may not grow. But companies need to pursue growth opportunities, no matter how unrealistic they seem at the moment.
And for a company like Meta that generates tens of billions of dollars in profits and free cash each year, the company can afford to take risks. AppleMETA’s new privacy features will take a toll on Meta’s revenue, and that’s a concern. However, with a forward price-earnings multiple of less than 14, Meta still looks incredibly cheap compared to other top tech stocks:
Meta PE Ratio (Forward) data from YCharts.
Even if the growth rate is slowing, Meta is a solid investment. As the owner of a top brand like Facebook that sees billions of eyes every day, it offers a lot of future monetization potential. Slow growth and a drop in new hires at the company have stalled investors, causing shares to fall 52% this year. However, from my perspective, it’s already a profitable business, generating a net margin of over 30%, which could break even more profitable Because it focuses on reducing its costs.
While its attractive growth numbers could be a stumbling block, Meta’s fundamentals should improve, making it a better investment over the long term.
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