Top Ancillary Cannabis Stocks to Watch as Q4 2024 Approaches
The US cannabis industry is growing at a rapid pace, with sales expected to reach $52 billion by 2026. As more states move toward legalization, ancillary companies that provide essential products and services are also gaining traction. These companies, which do not directly handle cannabis but support its production, are vital to the industry’s expansion. Recently, headlines have focused on discussions around federal legalization, sparking optimism for future growth. Investors looking to capitalize on this momentum should watch ancillary cannabis stocks, which often experience less regulatory risk than direct cannabis producers.
Using technical analysis and proper risk management is crucial when considering these stocks. Technical analysis helps investors identify trends, support levels, and potential entry points. For example, monitoring price movement and volume can signal potential breakouts or reversals. Additionally, risk management strategies, such as setting stop-loss orders, can help protect investments in a volatile market. Balancing these tools can maximize gains while minimizing potential losses in the cannabis sector.
The cannabis industry continues to grow at a steady pace in the United States. As legalization spreads and new markets open, ancillary companies that support the cannabis sector also experience significant growth. These companies don’t produce cannabis themselves but provide essential products and services. Below are three top US ancillary marijuana stocks to keep an eye on this September: GrowGeneration Corp. (GRWG), Scotts Miracle-Gro Company (SMG), and Hydrofarm Holdings Group, Inc. (HYFM).
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Top 3 US Ancillary Marijuana Stocks for Your Watchlist in September
- GrowGeneration Corp. (NASDAQ: GRWG)
- Scotts Miracle-Gro Company (NYSE: SMG)
- Hydrofarm Holdings Group, Inc. (NASDAQ: HYFM)
GrowGeneration Corp.
GrowGeneration Corp. is one of the largest suppliers of hydroponics and organic gardening products in the United States. The company operates a nationwide network of retail stores specializing in hydroponic supplies. GrowGeneration serves a wide range of customers, including cannabis cultivators, greenhouse farmers, and hobbyists. The company’s largest presence is in Colorado and California, where the cannabis industry is booming. It operates more than 60 retail locations across the US, with plans for expansion. This broad network makes it one of the most prominent suppliers for the cannabis cultivation industry.
In the latest financial reports, GrowGeneration reported a revenue decline of 34% year-over-year for Q2 2023, hitting $63 million. However, the company is actively working to streamline its operations, including reducing costs and improving its supply chain. Gross profits were down slightly, but the company remains optimistic about long-term growth. Adjusted EBITDA for the quarter came in at $2 million. As GrowGeneration adjusts to market conditions, it remains a key player in the ancillary cannabis sector.
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Scotts Miracle-Gro Company
Scotts Miracle-Gro Company, well known for its lawn and garden care products, has also established a strong presence in the cannabis industry. Through its subsidiary Hawthorne Gardening Company, Scotts Miracle-Gro supplies hydroponic and indoor growing equipment to cannabis cultivators. The company has built a strong reputation among both large-scale and small growers. Scotts Miracle-Gro has its largest cannabis-related presence in California and other states with legal cannabis. Though Scotts is not directly involved in cannabis production, Hawthorne supplies many of the tools and nutrients needed to grow cannabis effectively. This makes it a valuable partner in the industry.
In the latest financial results, Scotts Miracle-Gro reported sales of $1.14 billion for Q3 2023, reflecting an 8% increase from the previous year. Hawthorne, its cannabis-focused segment, contributed $205 million to that total. While this segment saw a year-over-year decline of 30%, the company remains committed to the cannabis space. Adjusted earnings per share for the quarter were $1.17, and its net income was $97 million. Despite some challenges, Scotts remains one of the most important ancillary companies supporting the cannabis industry.
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Hydrofarm Holdings Group, Inc.
Hydrofarm Holdings Group, Inc. is a leading supplier of equipment and supplies for controlled environment agriculture (CEA), which includes cannabis cultivation. Hydrofarm’s product offerings include lighting solutions, nutrients, and other growing supplies essential for indoor farming. The company has built a strong presence in the US, with distribution centers in California, Colorado, and Pennsylvania. Hydrofarm provides products for both small and large-scale cannabis growers. This widespread footprint makes it a key supplier in the rapidly expanding cannabis cultivation industry.
Hydrofarm’s most recent financial report showed that the company generated $63 million in net sales for Q2 2023. This represents a decline of 23% from the previous year, reflecting industry-wide pressures. However, Hydrofarm has been focused on reducing costs and improving profitability. Its gross profit margin was 18%, and its adjusted EBITDA was negative $2 million. While the financials show challenges, Hydrofarm remains optimistic about long-term growth in the cannabis sector. Its strong market position and extensive product line make it a stock to watch.
Key Ancillary Cannabis Stocks to Watch as Q4 2024 Nears
As the cannabis industry expands, ancillary companies like GrowGeneration Corp., Scotts Miracle-Gro Company, and Hydrofarm Holdings Group are essential in supporting its growth. These companies supply critical products and services needed for cannabis cultivation and distribution. While they face financial challenges due to market conditions, they remain vital to the industry’s infrastructure. Investors interested in the cannabis space should consider these ancillary stocks for their September watchlist. With strategic expansion plans, improved operations, and a focus on long-term growth, these companies are poised to benefit from the cannabis industry’s continued evolution.
MAPH Enterprises, LLC | (305) 414-0128 | 1501 Venera Ave, Coral Gables, FL 33146 | new@marijuanastocks.com
