Best Cannabis Stocks While Marijuana Stocks Are Down
Are you looking for the best marijuana stocks to buy for 2022? Since the start of the year, cannabis stocks have continued to decline as January is progressing. In general, the declines in the cannabis sector are associated with delays in US federal marijuana legalization and reform. One area that has declined significantly in recent trading weeks is ancillary marijuana stocks. In specific ancillary companies are those companies that support the cannabis market without touching the actual plant.
Some of these companies supply the necessary equipment and nutrients needed to grow cannabis across the US. In 2022 as new states legalize medical and recreational use the cannabis industry is rapidly expanding across the US. As demand increases cannabis producers need to increase their production and continue cultivation. For the next five years, the cannabis industry is forecast to more than double in size.
According to a recent report from Prohibition Partners global cannabis sales are forecast to grow from $37.4 billion in 2021 to reach $102 billion by 2026. This growth gives the cannabis market future potential for investors. One area that is positioned well for growth is companies that supply hydroponics, lighting equipment, and plant nutrients for cultivating. As new states begin establishing medical and recreational markets leading cultivation supply companies are growing alongside the market.
Ancillary Cannabis Stocks To Watch In 2022
Before investing in ancillary cannabis stocks, it’s always important to do your due diligence on a company. Researching a company’s finances and studying how a stock moves in the market can help you secure the biggest returns. With many analysts expecting a volatile year in the market pot stocks could see significant price fluctuations throughout the year. Because of this establishing a good entry-level is a major factor in making returns off your investments.
[Read More] Top Marijuana Stocks To Buy In 2022? 2 To Watch Right Now
To close out the week ancillary cannabis stocks have traded lower so far this year. As the demand for cannabis products increases across the US these companies are assisting in producing the necessary product to consumers. For this reason, let’s look at 2 top ancillary marijuana stocks for your watchlist in mid-January.
Top Ancillary Marijuana Stocks To Watch In January
- The Scotts Miracle-Gro Company (NYSE: SMG)
- GrowGeneration Corp. (NASDAQ: GRWG)
The Scotts Miracle-Gro Company
Scotts Miracle-Gro, one of the world’s leading marketers of branded consumer lawn and gardening goods, is also involved in the cannabis industry. For those unfamiliar, Hawthorne Gardening, the company’s fully owned subsidiary, is a prominent provider of fertilizers, lighting, and hydroponic equipment needed in the cannabis cultivation process. Scotts acquired Luxx Lighting and True Liberty Bags on January 6th, adding to the Hawthorne portfolio. Hawthorne’s industry-leading lighting portfolio will be strengthened as a result of the move. In addition, the company’s full-year projection remains unchanged, despite a slowdown in Hawthorne sales.
Currently, Scott’s expects a 40% slowdown in Hawthorne sales due to a cannabis slowdown and supply chain problems. To highlight, Scotts gave fiscal 2022 guidance with non-GAAP adjusted EPS of $8.50-$8.90 and announced the intention of share repurchase of $300 million in fiscal 2022.
Words From The President Of Hawthorne
“These strategic acquisitions reinforce our commitment to provide commercial cannabis cultivators in state-authorized markets with a complete set of solutions driven by insight and innovation.“While the cannabis market continues to see near-term challenges from an over-production in recent months, we see the current reality as an opportunity to further distance ourselves from the competition and strengthen our business for long-term success.”
Chris Hagedorn, Division President of Hawthorne
SMG Stock Performance
SMG stock closed at $164.92 on January 13th up 9.18% in the last month. Currently, the stock has a 52-week price range of $133.36-$254.34 and is down 8.76% in the past six months. According to analysts at CNN Business SMG stock has a 12-month price target of $190 per share. This forecast represents an increase of 15.17% from its last trading price of $164.92.
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GrowGeneration Corp. is a major owner and operator of retail hydroponic and organic gardening businesses in the United States. Organics, lighting, and hydroponic equipment are among the things that the company provides and distributes to cannabis producers. GrowGen now has 62 organic garden centers in 13 states, with the 11th and 12th facilities opening in southern California lately. Since the introduction of GrowGeneration.com, the company has focused on its internet presence. The site now serves as a one-stop e-commerce shop, offering over 10,000 products ranging from nutrition to lighting technology. Within the next five years, the company hopes to establish over 100 locations in the United States. During the third quarter, the company announced the opening of Los Angeles County’s largest hydroponic garden facility.
On January 13th GrowGen delivered its fourth-quarter and full-year revenue estimate with a record 2021 annual revenue. In general, the company gave a full-year revenue between $420-$422 million an increase of 118% year over year. In addition, same-store sales increased by 24.4$ for 2021. As it stands the company will provide further financial details in early March 2022.
Words From The CEO
“We delivered strong shareholder value in 2021 with triple-digit revenue growth despite unprecedented persistent challenges and an uncertain operating environment. Although we continue to grow our business significantly, we experienced stronger-than-expected pressures in Q4 from the general slowdown in the hydroponics market. The sales results for Q4 combined with one-time expenses will result in a loss for the quarter of between $2 million and $4 million in EBITDA on an adjusted basis. We did improve our inventory position throughout the quarter to align inventory levels with sales activities.”
GrowGen CEO Darren Lampert.
GRWG Stock Performance
The stock of GRWG closed at $9.90 on January 13th down 10.81% for the trading day. GRWG stock has a 52-week price range of $9.821-$67.75 and is down 78.36% in the past six months. GRWG stock has a 12-month median price forecast of $30 per share, according to CNN Business analysts. In this case, this would represent an upside of 122.45% from its last trade price of $9.90.
[Read. More] Top Marijuana Stocks To Add To Your Watchlist In January