Ancillary Cannabis Stocks to Watch in September 2023: Your Investment Blueprint
September 2023 presents an intriguing potential for investors in the ever-changing cannabis industry and top marijuana stocks environment. As legalization progresses, ancillary cannabis stocks, such as equipment providers that fuel cultivation, take center stage. This essay looks at the primary competitors to keep an eye on, technical analysis, and prudent risk management techniques.
Recent news has added to the excitement around marijuana stocks. Following the Department of Health and Human Services’ suggestion to reschedule marijuana, shares of many cannabis companies increased. Cannabis currently has the same federal categorization as strong and frequently lethal narcotics as heroin and ecstasy. This decision to classify marijuana as a lower-risk drug might pave the way for more extensive medical research, broader legalization, and higher institutional funding.
The exceptional expansion of the cannabis sector continues, with global legalization efforts opening up new markets. Ancillary companies have developed as hidden gems during this rush, providing crucial services to cannabis growing, processing, and distribution. Equipment manufacturers play an essential role in maximizing yields and protecting quality by delivering cutting-edge technology and techniques.
Navigating the unpredictable cannabis market demands a full understanding of technical analysis and industry experience. Investors can use chart patterns, indicators, and trends to make informed decisions. However, prudent risk management is required because of the inherent volatility, focusing on diversified portfolios and stop-loss methods. As we enter September 2023, staying connected to industry trends and analytical insights will be crucial in capitalizing on the ancillary cannabis stock growth.
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Emerging Trends: Ancillary Cannabis Stocks to Keep an Eye on in September 2023
- The Scotts Miracle-Gro Company (NYSE: SMG)
- Hydrofarm Holdings Group, Inc. (NASDAQ: HYFM)
- GrowGeneration Corp. (NASDAQ: GRWG)
The Scotts Miracle-Gro Company
Scotts Miracle-Gro, the world’s largest manufacturer of brand-name consumer lawn and garden products, has entered the cannabis industry. Hawthorne Gardening, the company’s wholly-owned subsidiary, provides hydroponic equipment, lighting, and fertilizers for cannabis production. Scotts expanded their Hawthorne collection with True Liberty Bags and Luxx Lights in January. As a result of the acquisition, Hawthorne will be able to expand its already excellent line of lighting products. Despite the profits reduction, Hawthorne’s year-end outlook remains intact.
Details for the Third Quarter
- Company-wide third-quarter net sales decreased 6% due to Hawthorne’s decline of 40%; U.S. Consumer net sales increased 1% over the prior year.
- Consumer POS dollars were up 8% in the third quarter and over 5% year-to-date.
- Year-to-date cash flow improved by over $700 million.
- Total Project Springboard savings to exceed $300 million
- Full-year sales and Adjusted EBITDA are expected to decline.
- Amended credit agreement updates leverage glide path, providing operational flexibility.
SMG Stock Performance
SMG stock closed at $53.72 on September 6th, down 3.38% in the past month. The stock has a 52-week price range of $39.06-$88.61 and is up 10.56% year to date. According to analysts at CNN Business, SMG stock has a 12-month price target of $65 per share. This forecast represents an increase of 20.98% from its last trading price of $53.72.
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Hydrofarm Holdings Group, Inc.
Hydrofarm is a leading independent manufacturer and distributor of branded hydroponics equipment and supplies for controlled environment agriculture, including grow lights, climate control solutions, growing media, and nutrients, in addition to a diverse portfolio of proprietary and innovative branded products. For over 40 years, Hydrofarm has been supporting producers in making growing easier and more productive. The company aims to produce goods that will assist growers, farmers, and cultivators in improving the quality, efficiency, consistency, and speed of their growth projects.
Second Quarter 2023 Highlights vs. Prior Year Period:
- Net sales decreased to $63.1 million compared to $97.5 million.
- Gross Profit increased to $14.5 million compared to $7.3 million. Gross Profit Margin increased to 23.0% of net sales compared to 7.5%.
- Adjusted Gross Profit(1) increased to $17.0 million compared to $9.1 million. Adjusted Gross Profit Margin(1) increased to 27.0% of net sales compared to 9.3%.
- Net loss was $12.9 million compared to net loss of $203.3 million.
- Adjusted EBITDA(1) increased to $2.5 million compared to $(6.8) million.
- Cash from operating activities of $9.9 million and Free Cash Flow(1) of $8.3 million.
Updated Full Year 2023 Outlook:
- Net sales of approximately $230 million to $240 million.
- Adjusted EBITDA(1) that is modestly positive.
- Positive Free Cash Flow(1).
HYFM Stock Performance
HYFM stock closed at $1.12 on September 6th, down 8.20% in the last month of trading. At present, HYFM stock has a 52-week price range of $0.6720-$3.25, down 27.74% year to date. According to analysts at CNN Business HYFM stock has a 12-month median price target of $1.27. In this case, this would represent an increase of 12.83% from its last trading price of $1.27.
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GrowGeneration Corp.
GrowGen owns and operates a specialty retail hydroponic and organic growing center. GrowGen now has 62 locations in 18 states. In addition, GrowGen also offers a cultivator superstore online at growgeneration.com. GrowGen offers and distributes a wide range of commercial and home growers products, including organic nutrients and soils, cutting-edge lighting technology, and cutting-edge hydroponic equipment for indoor and outdoor use.
Second Quarter 2023 Highlights
- Net sales increased 12% quarter-over-quarter to $63.9 million.
- Comparable store sales decreased 15.1% from the prior year.
- Gross profit margin of 26.8%, a decrease of 1.7% from the prior year
- Net loss of $5.7 million and Adjusted EBITDA(1) gain of $0.9 million
- Year-to-date cash flow provided by operations of $7.4 million
- Cash, cash equivalents, and marketable securities of $70.6 million
- Changing full-year 2023 guidance for revenue to be $220 million to $225 million and Adjusted EBITDA(1) to be a loss of $4 million to $6 million
Fiscal Year 2023 Financial Outlook
- Revenue guidance for 2023 is changed to between $220 million and $225 million.
- Adjusted EBITDA(1) guidance is changed to be between a loss of $4 million to $6 million.
GRWG Stock Performance
GRWG stock closed at $3.21 on September 6th, down 10.34% in the last month of trading. In addition, GRWG stock has a 52-week range of $2.55-$8.63 and is down 18.11% year to date. According to analysts at CNN Business, GRWG stock has a 12-month median price target of $4.75. In this case, this represents a 48.21% increase from its last trading price of $3.21.
Navigating the Ancillary Cannabis Market: Best Stocks for September 2023
The appeal of ancillary cannabis stocks in Q4 2023 draws savvy investors due to an enticing landscape. Strategic decisions based on technical analysis and risk management can produce considerable advantages as the sector grows and equipment innovation soars. As worldwide cannabis legalization spurs expansion, these supporting players will thrive.
Taking advantage of chances in a dynamic market requires combining industry vision and analytical ability. Keeping a watch on these top ancillary cannabis stocks as the fourth quarter progresses may pave the way for substantial rewards while limiting risks.
MAPH Enterprises, LLC | (305) 414-0128 | 1501 Venera Ave, Coral Gables, FL 33146 | new@marijuanastocks.com
