Investing In The Cannabis Market In 2022
As the market begins to rally are you looking for top marijuana stocks to invest in for 2022? This year the cannabis sector rallied in the first quarter because investors believed federal cannabis reform would be reached in 2021. Now as we close out the year most top cannabis stocks have seen significant declines in the market.
This is partly due to the delays in Congress with passing some form of federal marijuana legalization and reform. Although this week there has been some upward momentum with pot stocks, they are still trading at much lower levels than we saw at the beginning of the year. Although cannabis stocks are trading much lower in the market these same companies have delivered strong earnings in 2021. In addition, leading cannabis companies have expanded across the US this year as new states legalize cannabis use.
One area that is positioned to grow alongside the cannabis market is ancillary cannabis companies. Ancillary cannabis companies are those companies that support the cannabis industry without touching the actual plant. As the US continues to see growth on the state level ancillary companies that supply hydroponics supplies and lighting equipment to the cannabis industry have an opportunity to see significant growth.
Learning To Trade Market Volatility For Top Marijuana Stocks In 2021
In the past few months, this area of the market has seen substantial downward pressure and could be trading in an area that could offer some upside for investors. Before investing in any cannabis stocks, it’s always important to do your own due diligence on a company. Researching the company’s finances and press releases can help you find the best performers.
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For new retail investors learning what to look for as stock moves in the market can help you become a successful trader. Using technical analysis and learning how to establish winning trading patterns are good ways to maximize your returns. As the cannabis sector shows some upside in this week’s trading let’s look at 2 top ancillary marijuana stocks for your new year’s watchlist.
Top Ancillary Cannabis Stocks To Watch In December
- Hydrofarm Holdings Group, Inc. (NASDAQ: HYFM)
- Agrify Corporation (NASDAQ: AGFY)
Hydrofarm Holdings Group, Inc.
First on the list is Hydrofarm Holdings Group, Inc. a leading distributor and manufacturer of hydroponics equipment and supplies for controlled environment agriculture. Primarily, the company has equipment that facilitates cannabis cultivation. Generally speaking, the company has products ranging from high-intensity grow lights, climate control solutions, and growing media. In addition to a broad portfolio of innovative and proprietary branded products. In November the company announced it completed its acquisition of Innovative Growers Equipment, Inc.
Hydrofarm delivered its third-quarter 2021 earnings with net sales of $123.8 million up 28.1% year over year. In detail, the company increased gross profit to $30 million or 24.2% of net sales. As a result, the company has an Adjusted EBITDA of $16.1 million up 116.7% year over year. In addition, the company reaffirmed its previous 2021 outlook net sales of $470-$490 million. Also, the company announced it completed the acquisition of Aurora Innovations and Greenstar Plant Products, Inc. Specifically, this acquisition continues Hydrofarms efforts of acquiring manufacturers of branded products in key CEA categories.
HYFM Stock Performance
HYFM Stock closed at $30.24 on December 8th down 23.77% in the past month. The stock has a 52-week price range of $27.20-$95.48 and is down 42.49% year to date. According to analysts at CNN Business HYFM stock has a 12-month median price target of $49.00 per share. In this case, this would be an increase of 61.93% from its last trading level of $30.24.
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Agrify Corporation
Next up is Agrify Corporation which develops precision hardware and software grow solutions for the indoor agriculture marketplace primarily in the United States. At the present time, the company provides vertical farming units, integrated grow racks, and LED grow lights. In general, Agrify’s proprietary hardware and software solutions help its customers achieve the highest quality, consistency, and yield, all at the lowest possible cost. Overall, the company provides associated services comprising consulting, engineering, and construction. Recently, the company made the acquisition of Precision Extraction Solutions and Cascade Sciences two leading providers of equipment and solutions for extraction, post-processing, and testing for the cannabis and hemp industry. In October the company announced its entry into the Arizona cannabis market through a partnership with Olive El Mirage.
In November the company released its third-quarter 2021 results with revenue of $15.8 million up 460% year over year. To highlight, Agrify has new bookings of $32.2 million increasing its current backlog to $117.5 million. Agrify announced the first total turnkey solution partnership with Bud & Mary’s Cultivation, Inc. to install up to 1200 vertical farming units at its 50,000 SQ FT facility. Also important, the company has established a multi-year research and development partnership with Curaleaf Holdings, Inc. (OTC: CURLF). In detail, this research will study the impact of the cultivation environment on plant health and harvest yield. The company reaffirmed its full-year 2021 guidance of $48-$50 million. On December 8th the company announced it entered into a binding agreement to acquire PurePressure a leader in solventless extraction and advanced ice water hash processing.
AGFY Stock Performance
AGFY stock closed on December 8th at $15.03 up 3.73% for the trading day. The stock has a price range of $6.81-$35.94 and is up 40.47% in the past six months. According to analysts at Tip Ranks AGFY stock has a 12-month average price target of $34.67 per share. In this case, this would be an increase of 130.67%% from its last trading level of $15.03. As the cannabis sector continues to show upside going into the end of the year, these could be 2 of the best ancillary cannabis stocks for your watchlist right now.
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