These days, it's not always easy to decide what stocks to invest in. And with concerns about another market crash still looming among investors, how and where you invest your hard-earned money is more important than ever.
If you have $2,000 to invest and are searching for companies that can handle whatever the market brings next, here are two top-notch stocks to consider adding to your portfolio right now.
There's no way around it -- the retail industry as a whole has taken a severe beating over the past year. And even before the pandemic forced stores around the world to shutter for extended periods, the boom of e-commerce has posed a distinct challenge to many popular brands that traditionally operated in a brick-and-mortar environment.
But as with most things in life, there are always exceptions. Lululemon Athletica (LULU -3.30%) is one retailer that is diverging from the negative trends that have plagued apparel stocks in recent years and forging an increasingly profitable path of its own in the current economy.
There are a few different reasons that Lululemon has managed to stem the tide overwhelming other brands in the retail space. First, there's the industry in which it operates. The sports apparel market faces consistent, high demand regardless of changing fashion trends. This has been particularly true in recent years as athleisure and activewear have become increasingly popular to wear in a broad variety of settings, rather than just for sports activities.
Lululemon continues to be a key player in the sports apparel sector. Bear in mind, this is an industry that Allied Market Research estimates will reach a $248 billion valuation by the year 2026.
Over the past year, as millions of people have transitioned to performing work, school, and social activities from the comfort of home, the demand for comfortable, stylish athletic and loungewear has undoubtedly benefited Lululemon's top and bottom line as well.
Finally, the company has also been particularly well-poised to navigate the turmoil of the retail industry both before and throughout the pandemic due to its robust and expanding e-commerce presence. In the fourth quarter of 2020 alone, e-commerce revenues comprised 52% of Lululemon's top line, and grew 94% from the year-ago period.
Despite the trouble that befell much of the broader retail sector in 2020, last year was actually one of notable growth for Lululemon. The company's full-year revenues grew 11% from 2019. And in the fourth quarter, its revenues grew 24% year over year while its gross margin surged 60 basis points from the year-ago period. The company also opened four new net store locations in the fourth quarter, an impressive feat considering how many retailers have had to close stores during the pandemic.
Meanwhile, shares of Lululemon are trading more than 50% higher than just one year ago, a sign that investors are increasingly recognizing the long-term potential the stock has to offer a diversified portfolio. If you're looking to invest in retail stocks but have been discouraged by the volatility that has been increasingly persistent in the sector, Lululemon is a rare gem in its industry that can contribute both growth and value to a long-term investor's portfolio.
Innovative Industrial Properties
Another industry that has historically been plagued by headwinds is the cannabis sector. The good news is, there are a handful of fantastic marijuana stocks that contribute sustainable, high growth to shareholders' portfolios. One of my favorite examples is Innovative Industrial Properties (IIPR -2.09%).
The company is far from your average pot stock. It operates as a real estate investment trust (REIT) with a portfolio of properties that it leases exclusively to state-licensed growers of medical marijuana. Innovative Industrial Properties operates and leases facilities in a host of key medical marijuana states, including Arizona, California, Colorado, Illinois, and Nevada.
Although pot legalization is spreading across the U.S., the fact remains that marijuana use for medical purposes is far more broadly legalized than recreational usage. At the time of this writing, only 16 states and the District of Columbia have legalized marijuana for both medical and recreational purposes. In contrast, medical marijuana is legal in three dozen states.
Innovative Industrial Properties' focus on leasing only to licensed medical marijuana growers has undoubtedly contributed to its ability to consistently achieve and sustain exponential top and bottom line growth, even throughout the pandemic.
Case in point: The company produced 162% revenue growth and increased its net income by 191% in 2020. Innovative Industrial Properties also made substantial additions to its portfolio last year. Management said that the company put more than $620 million toward buying new properties last year, as well as toward expanding holdings already in its portfolio.
As if its rock-solid balance sheet wasn't enough to draw investors in, Innovative Industrial Properties also pays a robust dividend that yields approximately 3%. The company's in the habit of routinely raising its dividend. Most recently, it boosted its dividend for the first quarter of 2021 by 6%, compared to its payout the prior quarter. Shares of Innovative Industrial Properties have also jumped more than 150% over the past year.
As Innovative Industrial Properties continues to expand its foothold within the regulated U.S. cannabis industry and strengthen its balance sheet, it's likely that its stock price will shoot up higher as well. It looks like a great time for marijuana investors to buy shares of this high-growth dividend stock.