Key Ancillary Marijuana Stocks to Follow Now
As October 2023 begins, the cannabis market and marijuana stocks in the US are changing at a previously unheard-of rate. The cannabis sector continues to demonstrate tremendous growth potential as legalization spreads to more states. Investors looking for possibilities in this market are closely monitoring ancillary cannabis stocks or companies that support the cannabis industry by offering necessary services and goods without actually handling the plant. These supporting companies are crucial to the success of the industry as a whole and are well-placed tactically to profit from its expansion.
Recent figures show that the US cannabis market is growing astoundingly. Sales for the sector exceeded $25 billion in 2022, and it is anticipated that they would rise even further in 2023. The demand for ancillary services, including cannabis packaging, cultivation tools, and technology solutions, is anticipated to soar as more states legalize marijuana. An intriguing investment choice, ancillary businesses are essential to the effectiveness and compliance of cannabis enterprises. However, investors need to use prudence while considering these stocks, technical research and sound risk management. Thorough study and wise investment techniques are crucial for managing the exciting but uncertain opportunities top ancillary cannabis stocks present in October 2023.
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Top Ancillary Marijuana Stocks for Your Watchlist
- GrowGeneration Corp. (NASDAQ: GRWG)
- The Scotts Miracle-Gro Company (NYSE: SMG)
- WM Technology, Inc. (NASDAQ: MAPS)
GrowGeneration Corp.
GrowGen owns and operates a specialized retail hydroponic and organic growing facility. GrowGen currently has 62 locations in 18 states. At growgeneration.com, GrowGen also operates a superstore for cultivators. GrowGen offers and distributes various products for both professional and home gardeners, including organic nutrients and soils, state-of-the-art lighting, and cutting-edge indoor and outdoor hydroponic equipment.
Second Quarter 2023 Highlights
- Net sales increased 12% quarter-over-quarter to $63.9 million
- Comparable store sales decreased 15.1% to the prior year
- Gross profit margin of 26.8%, decrease of 1.7% to 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 be between $220 million to $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 $2.77 on October 5th, down 14.77% in the last month of trading. In addition, GRWG stock has a 52-week range of $2.55-$8.63 and is down 29.34% 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 71.17% increase from its last trading price of $2.77.
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The Scotts Miracle-Gro Company
Scotts Miracle-Gro, the world’s largest brand-name consumer lawn and garden product manufacturer, has entered the cannabis industry. Hawthorne Gardening, a completely owned subsidiary of the business, provides hydroponic tools, lighting, and fertilizers for cannabis growing. Scotts expanded their Hawthorne collection in January with the addition of True Liberty Bags and Luxx Lights. As a result of the acquisition, Hawthorne will be able to expand its already first-rate selection of lighting products. The decrease in profits has no impact on Hawthorne’s year-end outlook.
Details for the Third Quarter
- Company-wide third quarter net sales decreased 6% due to Hawthorne decline of 40%; U.S. Consumer net sales increased 1% over the prior year
- Consumer POS dollars up 8% in the third quarter and over 5% year to date
- Year-to-date cash flow improved over $700 million
- Total Project Springboard savings to exceed $300 million
- Full-year sales and Adjusted EBITDA expected to decline
- Amended credit agreement updates leverage glidepath providing operational flexibility
SMG Stock Performance
SMG stock closed at $47.83 on October 5th, down 13.08% in the past month. The stock has a 52-week price range of $39.06-$88.61 and is down 1.56% 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 35.93% from its last trading price of $47.83.
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WM Technology, Inc.
Weedmaps is a cannabis marketplace online as well as a user and business directory. The company owner is WM Technology, Inc. Cannabis stores widely use the cloud-based SaaS solutions from WM Business as their operating system. The solutions and services offered by WM Business often make it simpler to adhere to the complex and constantly evolving regulatory requirements for the cannabis sector. To diversify its product offering, WM Technologies introduced a digital payment option in Ontario in May. As curbside pickup, delivery, and cashless transactions increased in popularity, small companies benefited.
Second Quarter 2023 Financial Highlights
- Revenue was $50.9 million as compared to $58.3 million in the second quarter of 2022 (“prior year period”).
- Average monthly paying clients(1) was 5,609, as compared to 5,537 from the prior year period.
- Average monthly revenue per paying client(2) was $3,022, as compared to $3,509 from the prior year period.
- Net income was $2.0 million as compared to net income of $19.8 million from the prior year period.
- Adjusted EBITDA(3) was $10.2 million as compared to $(0.6) million from the prior year period.
- Basic and diluted net income per share were both $0.01 based on 92.9 million and 93.6 million of Class A Common Stock weighted average shares outstanding, respectively.
- Total shares outstanding across Class A and Class V Common Stock were 148.9 million as of June 30, 2023.
- Cash totaled $24.6 million as of June 30, 2023, with no debt.
MAPS Stock Performance
MAPS stock closed at $1.36 on October 5th, down 11.69% in the last month of trading. The stock has a 52-week price range of $0.596- $2.81 and is up 34.65% year to date. According to analysts at CNN Business, MAPS stock has a 12-month average price target of $2.06 per share. In essence, this would represent an upside of 51.10% from its last trading price of $1.36.
Ancillary Cannabis Companies to Watch for Promising Returns
In conclusion, the dynamics of the ancillary marijuana stock market are presenting investors with intriguing opportunities in October 2023. As the cannabis industry continues to expand across the United States, ancillary companies are becoming increasingly vital in supporting and shaping its growth. These stocks offer a unique position to benefit from the cannabis boom without directly dealing with the inherent regulatory challenges faced by plant-touching businesses.
However, it’s important to remember that the marijuana sector can be unpredictable, and wise investors should conduct thorough research, employ technical analysis, and implement proper risk management strategies. By doing so, they can potentially capitalize on the immense potential that ancillary marijuana stocks offer while navigating the market’s inherent volatility. As we move forward, staying informed and vigilant will be key to seizing the opportunities that this dynamic and evolving industry continues to present.
MAPH Enterprises, LLC | (305) 414-0128 | 1501 Venera Ave, Coral Gables, FL 33146 | new@marijuanastocks.com
