Being "greedy when others are fearful" is one of the more popular Warren Buffett quotes investors are likely familiar with. Well, with fears of a recession and inflation mounting, this may be the time to load up on some stocks. Valuations are crashing, whether stocks have good fundamentals or not. And for investors who can afford to hang on for multiple years, now can be a great time to buy.
A couple of stocks that look incredibly promising today include Innovative Industrial Properties (IIPR +1.76%) and Meta Platforms (META +0.22%). I've already bought one of these bargains this year, but both look like solid buys. Here's why investing $10,000 into either one of these stocks can generate thousands in profits for you in a year or two.
NYSE: IIPR
Key Data Points
1. Innovative Industrial Properties
What I really like about Innovative Industrial Properties (IIP) is that it gives investors the ability to collect a high dividend without sacrificing growth potential. Its 6.3% yield is high (the S&P 500 averages 1.7%)and it isn't unaffordable. The real estate investment trust's free cash flow over the past few years has been growing and is sufficient to cover its dividend payments:
Fundamental Chart data by YCharts.
The company also offers some long-term growth potential as the cannabis industry expands into new states. It has 111 properties in its portfolio as of the end of June with 8.6 million in rentable square feet in 19 states. IIP is well-positioned to help cannabis producers expand in the industry through its sale-and-leaseback agreements.
IIP's net income over the trailing 12 months has totaled $121 million, which is more than half of its revenue ($226 million) during that period. IIP's strong margins, promising growth opportunities, and high-yielding dividend make it one of the best stocks to buy right now.
Although the pot stock has lost more than half of its value this year, the marijuana market as a hole hasn't been strong, with the Horizons Marijuana Life Sciences ETF falling 45% over the same time frame. Buying IIP's stock today could set investors up for some great gains in a few years.
NASDAQ: META
Key Data Points
2. Meta Platforms
I bought shares of Meta Platforms earlier this year, despite being unconvinced of the company's transition to the metaverse. It's the company's business today that looks impressive, not a venture that may or may not pan out. But companies need to pursue growth opportunities, regardless of how unrealistic they may appear right now.
And for a company like Meta, that's generating tens of billions in profits and free cash each year, the business can afford to take chances. Apple's new privacy features are going to put a dent in Meta's earnings, and that is a concern. However, at a forward price-to-earnings multiple of less than 14, Meta still looks incredibly cheap compared to what other top tech stocks trade at:
META PE Ratio (Forward) data by YCharts.
Even if its growth rate does slow down, Meta makes for a solid value investment. Owning a top brand like Facebook that has billion of eyeballs every day on it gives it loads of monetization potential in the future. Investors are hung up on slowing growth and the business cutting back on new hires, which is why its shares have fallen 52% this year. What I see, however, is an already profitable business that commands net margins of more than 30% that could become even more profitable as it focuses on cutting its costs.
Although its flashy growth numbers may stumble, Meta's fundamentals should improve, making it a much better investment over the long haul.
