- Scotts Miracle-Gro Co’s stock price remains on the high ground amid excellent results.
- Hydroponic equipment sales have leaped by 41%, driving growth.
- “Picks and shovels” could be the next trend in marijuana stocks investing.
Investing in pot stocks does not necessarily mean selling cannabis products – just as most of those making money in the gold rush did not look for gold. Scotts Miracle-Gro Co was founded in 1868, selling lawn seed pest control products.
However, the Marysville, Ohio based company has adapted to the times and entered the third decade of the 21st century by serving the needs of the young growing weed market. Through its Hawthorne Growing subsidiary, the firm caters to the indoor cannabis cultivation market. Its hydroponic equipment sales have leaped 41% yearly, boosting the broader company’s sales in a quarter that is usually weak.
NYSE: SMG stock price
While the company lost money in its traditionally weak first fiscal quarter, losses per share stood at $1.12 against $1.27, propelling the stock price to a new all-time high of $125.26, breaking above the previous peak around $110. Its 52-week trough was $72.27, making its bottom-to-top rise over 70%, without the stomach-turning drops.
The company, which employs around 6,500 people, is now valued at nearly $7 billion with a P/E ratio of just under 15. While it is not a classic marijuana stock, it has more solid foundations and offers less risk than new firms in the industry.
Investing in Marijuana Stocks
After skyrocketing in late 2018, when Canada legalized weed, shares of pot companies had a wild 2019. Some firms suffered from financial issues, while others hit regulatory hurdles. Nevertheless, the industry continued enjoying rapid expansion, growing at 15% last year, ten times Canada’s overall growth.
As mentioned at the outset, some of the best investments may be in companies that offer equipment to growers or accessories, rather than those catering directly to consumers. During 2020, the most significant market movers may be US lawmakers, gradually extending legalization in its various forms to other states.
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