Is Scotts Miracle-Gro the Best Cannabis Stock for 2021?
Cannabis stocks continue to experience high levels of volatility. However, cannabis stock investors are gaining more insight into the winners and losers in the sector. Among the available options, investors should look out for stocks that are both profitable and provide steady, consistent gains. Scotts-Miracle-Gro (NYSE: SMG) is one such cannabis stock that can help you make more than 100% – but is Scotts Miracle-Gro the best cannabis stock for 2021?
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The Marysville, Ohio-based company is a seller of systems for hydroponic gardening and other products utilized for growing cannabis and other crops. Over the past five years, the stock has provided a 204% return to its investors including a 31% surge over the last quarter. In fact, Cannin.com analysts gave SMG a STRONG buy rating back in December 2018 and again in May of 2020. Had you taken our advice then, you would have made a near 100% ROI.
Cannin.com has over two years of successful stock picks. In fact, 78% of our picks prove to be true within 30 days or less.
Sweeping Cannabis Legalization
The cannabis green wave is expected to continue in 2021 as well, and there is a good chance of bringing in some remarkable reforms. As legalization continues across the US (with federal decriminalization becoming more likely) there stands to be a massive acceleration in the purchase of hydroponics, the main product offered by Scotts Miracle to the Cannabis Industry.
Although Scotts-Miracle-Gro does not grow cannabis itself, the green wave will favor the company’s growth. Cannabis growers will always require products like hydroponics, fertilizers, or LED lighting systems for production. Scotts-Miracle-Gro is a major player in this space. Its subsidiary, Hawthorne Gardening Company, a dealer of indoor and hydroponic growing will benefit the most from this wave.
The Hawthorne business segment deals in gardening items for both commercial and hobby purposes and makes the highest contribution towards the company’s revenues. Since cultivation using hydroponics requires only a fraction of space with no soil so growing inside homes is also possible.
The evolving mindsets of people towards the pot and the pandemic have further intensified its customer base. Scotts-Miracle-Gro also advocated the benefits of hydroponic gardening. Due to these reasons, Hawthorne’s products are now demanded not only by businesses but also by consumers wanting to cultivate for themselves. This division is now bringing the majority of its revenue underlying the success of the Hawthorne acquisition.
Exponential Growth Strategies for SMG
Scotts-Miracle-Gro leadership has made some great decisions that have catalyzed the company’s growth. It immensely benefited from the synergies achieved from the acquisition of Sunlight Supply and also achieved a huge competitive advantage. Further, it created a modern and cost-efficient supply chain for its hydroponic business.
In addition, Scotts-Miracle-Gro teamed up with North America’s first research and development facility, The Flowr Corporation. The company aims to increase its ability in producing high-quality premium cannabis containing maximized cannabinoids and terpene expression of genetics. With this collaboration, it aims to successfully produce a stain at par with its award-winning, flagship-strain BC Pink Kush.
Bottom Line: Is Scotts Miracle-Gro the Best Cannabis Stock for 2021?
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Scotts-Miracle-Gro has outperformed just about every cannabis stock in the industry. In this fourth quarter, its US consumer sales grew by 90% during the quarter, while the company-wide sales also increased by 79%. Hawthorne sales itself rose by 68% rise for Q4 and 61% for the full year.
This increase in sales was seen across all the products and retail channels. EPS of $7.24 was achieved against $4.47 of Q3-2019. Free cash flows of $495.3 million were also recorded for the year indicating solid liquidity in its operations. Scotts-Miracle expects to deliver an EPS ranging from $8 to $8.40 during the fiscal year 2021 which means yet another year of double-digit growth in earnings is visible.
From the looks of it, Scotts-Miracle-Gro has positioned itself as the best cannabis stock for 2021 and certainly one we stand behind.
Is Scotts Miracle-Gro the Best Cannabis Stock for 2021?
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