Are Marijuana Stocks A Buy At Current Levels?
Marijuana stocks have lost substantial value in the past few weeks giving them much more appeal to new investors. At current market valuations, they are more likely to see gains in the near future. Generally, the cannabis sector has been delivering gains for investors in 2021. In January and February, most top cannabis stocks to buy saw substantial upward momentum. In fact, most top pot stocks saw new highs in February before the market pullback. Essentially, those new highs could be a gauge as to where the marijuana stocks could go with the proper catalyst for the sector.
One important element to remember about the cannabis sector is the market volatility the sector is known for. In general marijuana stocks have shown extreme volatility during their short time in the market. This has made investors nervous about investing in the sector especially for long-term holds. But in the long term, the cannabis industry is expected to more than double during the next five years.
In essence, this means there could be significant gains in the sector in the long run. Some marijuana stocks have more long-term potential because they have shown more stability in the market. As things progress in the industry these companies have positioned themselves to grow alongside the cannabis market. Ancillary marijuana stocks are cannabis companies that support the cannabis industry without actually touching the plant. These companies have positioned themselves in different aspects of growing markets.
Areas Of Growth In The Cannabis Sector
One area that will expand rapidly is the cannabis agriculture market. Currently, there are a few hydroponics equipment suppliers that have established a strong footprint in the cannabis market. In the past, these types of cannabis stocks have shown more stability in the market. In some cases, these companies also give a dividend to shareholders for long-term incentive. At the present time, cannabis demand is rising in the U.S. and across the world. This will give these companies a boost in revenue growth that can already be seen in 2020.
It’s important to realize that investing in marijuana stocks could help your portfolio when you find the right pot stocks with potential. Although any investment has its inherited risk it could be time to add some cannabis stocks to your 2021 watchlist. For the purpose of researching some of the top marijuana stocks to buy in the cannabis market. Let’s take a deeper look at 2 marijuana stocks to watch for possible long-term investments.
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Marijuana Stocks To Watch:
- The Scotts Miracle-Gro Company (NYSE: SMG)
- Hydrofarm Holdings Group, Inc. (NASDAQ: HYFM)
The Scotts Miracle-Gro Company
The Scotts Miracle-Gro Company is a leading marketer of branded consumer lawn and gardening products globally. Additionally, its wholly-owned subsidiary Hawthorne Gardening is also a leader in hydroponic and indoor growing products for the cannabis industry. Currently, with approximately $4.1 billion in sales Scott’s is among the most recognized brands in the industry. In February Scotts announced record Q1 fiscal 2021 results with U.S. consumer sales increasing 147%. Also, Hawthorne sales are up for the period 71% and companywide sales increased 105% to $748.6 million. Hawthorne’s first-quarter sales were $309.4 million due to strong demand for indoor growing equipment and supplies.
Because of its diversity in the agriculture sector, Scott’s gives investors exposure to two different parts of the business. IAs an incentive for long-term shareholders, Scott’s also provides an annual dividend of $2.48 per share. With its latest financials, the company reports its first-ever profit for a fiscal first-quarter it could be time to add SMG stock to your watchlist for a possible long hold. Currently SMG stock has lost 16.2% of its value in the market since its financials.
SMG stock is trading at $198.39 with a high of $250 in February. As the market recovers from this recent downturn SMG stock could have some upward potential. According to analysts at CNN Business SMG stock has a 12-month median price target of $270. This would be a 36.10% gain from current trading levels. With this in mind, SMG stock is a top marijuana stock to watch for 2021.
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Hydrofarm Holdings Group, Inc
Hydrofarm Holdings Group, Inc is an independent distributor and manufacturer of hydroponics equipment and supplies for controlled environment agriculture. To elaborate, the company provides high-intensity grow lights, climate control solutions, as well as a portfolio of branded products. Hydrofarms is a newly publicly trading company for over 40 years in the private sector. After the companies, introduction to the market HYFM stock has seen significant gains in a fairly short period of time. Actually, on the first day of trading, the stock rose over 160% from its initial offering of $20 per share.
On February 24th Hydrofarm released its growth outlook for fiscal 2021 as the cannabis market continues to expand. In detail, the company is expecting 20% organic topline growth for the fiscal year 2021 when comparing to 2020. CEO and Chairman of Hydrofarm, Bill Toler expressed, “I continue to be impressed with the momentum of our business in the months since our public offering. In light of our sales trajectory experienced thus far in the first quarter, we now expect to achieve full-year organic topline growth of at least 20% during fiscal 2021 as compared to fiscal 2020.”
HYFM stock is down 9.72% year to date after the recent selloff across the cannabis sector. Currently closing trading at $47.47 on March 8th the stock could be primed for some gains in the market. At the present time, analysts at TipRanks are giving HYFM stock a 12-month average price target of $70.75. In essence, this would be a 49.20% gain from current levels. For this reason, HYFM stocks is a possible top marijuana stock to invest in for 2021.
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