September’s Leading Ancillary Cannabis Stocks for Your Portfolio
The US cannabis industry has grown significantly, with projections estimating the market could reach $40 billion by 2025. As more states legalize cannabis, ancillary companies supporting the industry have become critical players. These companies provide essential products and services, such as hydroponic equipment and cultivation supplies. Recent headlines highlight the push for federal legalization as Congress considers new bills aimed at decriminalizing cannabis. Investors are closely watching this space as legalization could open new revenue streams. Given this promising outlook, ancillary cannabis stocks have become attractive for those seeking to capitalize on the industry’s growth.
Technical analysis and proper risk management are essential for cannabis stocks. Analyzing stock trends, support levels, and moving averages can help identify the best entry points. At the same time, risk management ensures investors are prepared for potential market volatility. This approach allows investors to mitigate losses while taking advantage of growth opportunities.
The cannabis industry continues to expand across the United States, with many ancillary companies playing vital roles in its success. Ancillary companies don’t directly handle the cannabis plant. Instead, they provide essential products and services to the industry. This allows investors to gain exposure to the cannabis sector without the same risks as pure-play cannabis companies. In September, three leading ancillary marijuana stocks to watch are GrowGeneration Corp. (GRWG), Scotts Miracle-Gro Company (SMG), and Hydrofarm Holdings Group, Inc. (HYFM). These companies support cannabis cultivators and dispensaries, making them key players in the industry’s growth.
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Top Ancillary Cannabis Stocks to Watch in September
- GrowGeneration Corp. (NASDAQ: GRWG)
- Scotts Miracle-Gro Company (NASDAQ: SMG)
- Hydrofarm Holdings Group, Inc. (NASDAQ: HYFM)
GrowGeneration Corp.
GrowGeneration Corp. is one of the US’s largest suppliers of hydroponics and organic gardening products. It operates retail stores that provide equipment and supplies to cannabis cultivators. The company’s presence spans multiple states, with over 60 stores nationwide. This wide reach allows them to support cannabis growers in key markets, including California and Colorado, where cannabis cultivation is booming. GrowGeneration caters to both small-scale home growers and large commercial operations. It has become a go-to resource for those in the cannabis-growing community.
In its most recent financial report, GrowGeneration demonstrated strong performance despite market challenges. The company reported $55 million in revenue for the second quarter of 2023, a slight increase from the previous quarter. However, they did face some setbacks, including a net loss of $2.8 million, reflecting ongoing adjustments in the cannabis market. On a positive note, their gross profit margin improved to 29%, indicating better cost management. The company is also focused on expanding its online sales, which increased by 15% compared to the same period in 2022.
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Scotts Miracle-Gro Company
Scotts Miracle-Gro Company is a household name in gardening and lawn care products. However, its subsidiary, Hawthorne Gardening, is a significant player in the cannabis sector. Hawthorne provides lighting, nutrients, and hydroponic equipment to commercial cannabis growers. The company’s products are widely used in indoor cultivation, where cannabis thrives. Although Scotts is better known for its mainstream gardening products, its cannabis-focused division has grown considerably over the past few years. Hawthorne operates in several states with legalized cannabis markets, including California, the largest cannabis economy in the US.
Financially, Scotts Miracle-Gro experienced a challenging year in 2023, primarily due to overall economic conditions and a slowdown in cannabis cultivation demand. For the fiscal third quarter, the company reported a decline in Hawthorne’s sales by 17%. This reflects the broader market trend where growers have scaled back operations. However, the company remains optimistic about future growth, especially as more states legalize cannabis. Scotts expects Hawthorne’s performance to improve as the cannabis market stabilizes. Despite the downturn, Scotts’ overall revenue was $1.12 billion in the third quarter, supported by its core lawn and garden business.
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Hydrofarm Holdings Group, Inc.
Hydrofarm Holdings Group, Inc. is another leading hydroponic and controlled-environment agriculture equipment supplier. The company provides essential products, such as grow lights, climate control systems, and nutrients, to cannabis cultivators. Hydrofarm’s product line is well-suited for large-scale commercial and smaller home-based growers. The company has a strong presence in the US, particularly in California, which remains the largest legal cannabis market. Hydrofarm operates distribution centers nationwide, ensuring quick access to products for growers in key regions.
Hydrofarm faced some financial headwinds in 2023 due to market saturation and reduced demand for cultivation supplies. For the second quarter, the company reported net sales of $63.1 million, a decline from the previous year. Sales declined largely due to lower demand in the cannabis cultivation sector. Hydrofarm posted a net loss of $13.9 million for the quarter, reflecting the challenges in the broader cannabis market. However, the company’s leadership is optimistic about long-term growth. Hydrofarm is working on cost-cutting measures to improve profitability while positioning itself to benefit from future market rebounds.
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Key Ancillary Cannabis Stocks to Watch in September 2024
As the cannabis industry matures, ancillary companies like GrowGeneration, Scotts Miracle-Gro, and Hydrofarm remain essential to the supply chain. These companies provide critical equipment and support to cannabis cultivators, ensuring that the industry continues to grow. Although they have faced financial challenges in recent quarters, their long-term prospects are strong as more states legalize cannabis and demand for cultivation supplies rebounds. For investors looking to gain exposure to the cannabis market with less direct risk, these ancillary stocks are worth watching in September.
MAPH Enterprises, LLC | (305) 414-0128 | 1501 Venera Ave, Coral Gables, FL 33146 | new@marijuanastocks.com
