In my humble opinion, the cannabis space has bottomed, but regulation and bottlenecks due to lack of retail outlets are going to limit revenue and sales for the next 12 to 18 months. In addition, as production ramps up by all companies the space, cannabis is essentially becoming a commodity, unless you are within the niche medical cannabis lane.
The California Gold Rush took place in 1849 when thousands of people went to California hoping to get rich quick after finding out that gold was found at Sutter's Mill on James Marshalls' land. James Marshall tried to hush it up but the news, but Sam told as many people as he could so he could sell them shovels and make a fortune in the process. The shovels were a derivative of the gold. Meaning, instead of looking for the gold, build a business that profit of the people who make the money.
The marijuana industry has become the new gold rush and one of the companies acting as the shovel is Scotts Miracle-Gro. Scotts Miracle-Gro is that company that helps your lawn stay plush and lush.
They have leverage their expertise in lawn care to also help companies improve their crop yields. So it only makes sense that they participate in the new Gold Rush. Their subsidiary Hawthorne Gardening primarily provides hydroponic solutions to the medical cannabis industry.
Hydroponics involves the growth of plants in a nutrient-rich water solvent as opposed to soil. Scott Miracle-Gro also acquired Sunlight Supply which sells hydroponic equipment to small- and medium-sized cannabis businesses and offers a similar array of hydroponic equipment. But the company is a $9 billion market cap company.
GrowGeneration Corp., through its subsidiaries, owns and operates retail hydroponic and organic gardening stores in the United States. It engages in the marketing and distribution of horticultural, organics, and lighting and hydroponics products.
Covering the stock for the firm, 5-star analyst Brian Nagel likes what he’s seeing, to put it lightly. “GRWG represents a leading, yet still early stage, up-and-coming retail chain within the rapidly expanding and dynamic market for hydroponic and organic gardening supplies,” he noted.
Speaking to its footprint, the company operates 27 stores in ten states. That said, over the next few years, Nagel estimates that new store additions, including acquisitions and greenfield expansions, could approach more than 20 units per year, putting its total number of locations at over 90 stores by 2023.
Our initial analysis suggests that, as GRWG accelerates further acquisition and organic expansion efforts, the company should increasingly capitalize upon scale-related synergies and over time deliver even better profit and cash generation.”
GrowGeneration, which runs dozens of specialty hydroponic and organic garden centers across the country, is expecting to bring in even more business this year than previously thought in a budding industry, CEO Darren Lampert, the CEO of
GrowGeneration was on Mad Money earlier this week and told Jim they saw a 50% increase in walk-in business quarter over quarter and that the company is riding the wave in the early stage of a multi-billion dollar industry. Darren said they can service the mom and pop shops to the larger companies such as Harvest Health, Cresco Labs, Curaleaf and Acreage Holdings. The company is looking to have 50 locations open in 15 states by the end of 2021.
Yesterday, I noticed some bullish usual options activity. Today was the same thing as the Smart Money bought over 10000 call options at the $22.50 strike price that expires this Friday. As of today, those options are up over 500%.
This post is my personal opinion. I’m not a financial advisor, this isn't financial advice. Do your own research before making investment decisions.
