Carlisle Companies (CSL -0.05%), Innovative Industrial Properties (IIPR 3.22%) and AbbVie (ABBV -2.10%) have all seen shares double over the past three years. All three have the potential to double their shares again over the next three years because of their stability, consistent revenue growth, and attractive dividends.
On top of that, none of them are overvalued, all trading below three times earnings. So even though their stocks may take an occasional tumble, they won't likely fall too far.
1. Carlisle Companies: quietly forging ahead
Carlisle Companies was trading at $105.07 a little more than two years ago. Now, its shares are about $245 a pop, and they are up more than 25% over the past year.
Carlisle has its own built-in diversity of sales, as it is four companies under one umbrella: Carlisle Construction Materials, Carlisle Waterproofing Technologies, Carlisle Interconnect Technologies, and Carlisle Fluid Technologies. These companies manufacture and supply engineered materials to be used by original manufacturers. Because Carlisle sells to businesses, it is lesser-known by average consumers, but it brought in $4.8 billion in revenue last year and it plans to grow annual revenue to $8 billion by 2025.
Carlisle is coming off a record $1.5 billion in revenue in the first quarter, up 59% year over year. Earnings per share (EPS) were $3.67, an increase of 209% over the prior year. It also improved its operating margin to 18.5% in the first quarter, up from 9% in the same quarter last year.
While all of its businesses did well, Carlisle Waterproofing Technologies was the biggest driver, with revenue of $359.1 million, up 120.4% over the same period in 2021, and operating income of $37.5 million, up 253.8% year over year. The company said the reason for that increase is the company's $1.6 billion acquisition last September of the Henry Company, which provides building systems that control the flow of water, vapor, and energy, serving construction and repair projects in residential, light commercial, and commercial end-markets.
Carlisle has increased its dividend every year for 45 years, including a 3% raise last year to $0.54 per share, which works out to a yield of 0.87%. That's not exactly splashy but perfectly safe, as the company's annual cash dividend payout ratio is 39.21%.
2. Innovative Industrial Properties continues to grow
Innovative Industrial Properties was below $60 a share in March 2020. As of earlier this week, it was trading at $133 a share, and that's after falling more than 49% this year. Innovative, as the first and most prominent real estate investment trust (REIT) to work exclusively on lease buybacks with cannabis companies, has taken a hit to its shares at the same time its tenants' shares have fallen, but the company's business model appears solid.
It's no stretch to say that the company's shares could trade for double what they are today because they were trading for just under $280 a share last November. In the interim, the company's financials remained strong, even though investor confidence in the stock fell.
In the first quarter, Innovative reported revenue of $64.5 million, up 50% year over year, while EPS was $1.32, compared with $1.05 in the same period in 2021. More importantly for a REIT, its funds from operations (FFO) were $48.9 million, with an FFO per share of $1.86, up from $34.4 million and $1.39 in the first quarter of 2021.
The company raised its dividend in the first quarter by 17% to $1.75 per share, representing a yield of 5.26%. The company has boosted its dividend by 68% over the past three years, but its adjusted FFO payout ratio of 79% is considered safe, particularly for a REIT.
IIPR has shown stronger growth than a typical REIT because it has been vigorous in adding new properties. As of May 16, it owned 110 properties comprising roughly 8.2 million rentable square feet. That's up from 19 properties comprising 1.3 million rentable square feet just three years ago.
The big concern among investors is what happens with the company's business model if federal laws are passed making it easier for cannabis companies to get regular financing. I think that concern is more than made up for by the continued growth of the industry, showing cannabis companies will continue to do leasebacks to free up cash for expansion. IIPR's size and first-to-market status should continue to make it the go-to REIT in the industry.
3. AbbVie's deep pipeline keeps paying off
AbbVie is trading for $155 a share. A little over two years ago, it was trading at just under $69 a share. Despite all the turmoil in the market this year, the giant pharmaceutical company remains a bright spot, with shares up more than 10% so far in 2022.
In the company's first quarter, it reported revenue of $13.5 billion, up 4.1% year over year, and EPS of $2.51, up 26% over the first quarter of 2021.
AbbVie isn't as reliant on blockbuster immunology drug Humira as some think. While its sales declined 2.7% (including a drop of 22.6% outside the United States because of biosimilar competition), the company's other immunology drugs, Skyrizi and Rinvoq, continue to grow in sales. Skyrizi had $940 million in revenue in the quarter, up 63.7%, year over, and Rinvoq had $465 million in revenue, up 53.6% from the same period last year. In addition, the company's aesthetics and neuroscience franchises were up 20.5% and 19.2%, respectively, year over year.
There's likely to be plenty of growth ahead as the company expands the label uses for Skyrizi and Rinvoq, along with cashing in on a strong oncology portfolio, led by blood cancer therapies Venclexta ($473 million in revenue in the quarter) and Imbruvica, which brought in $1.2 billion in revenue in the quarter.
Then there's AbbVie's dividend, which it raised this year by 8.5% to $1.41 per share, giving it a yield of roughly 3.71%, which dwarfs that of most pharmaceutical companies. Counting its time as part of Abbott Labs, AbbVie has raised its dividend each year for 50 consecutive years (making it a Dividend King) and by 250% since it broke off from Abbott in 2013. Its annual cash dividend payout yield is only 42%, so there's room for more dividend increases.
Doubling down on doubling your returns
Of the three, Innovative Industrial Properties might have an easier time doubling its share price over the next three years since it previously hit $280 a share last November. Any movement toward more states legalizing marijuana sales would likely push the stock back up, as long as the company's financials remain strong.
I could easily see AbbVie doubling its share price within the next three years, particularly if it continues to watch its other immunology drugs other than Humira grow revenue. Because of its higher price, Carlisle Companies would have the most difficult time doubling its share price in three years, but the company is probably the safest bet of the three companies to continue rising. If it reaches its goal of $8 billion in revenue by 2025, its shares could double from where they are now.