Observing How The Stock Market Reacts This Week
This week is a busy week in the stock market and could affect top marijuana stocks to buy. During the third week in May, we have significant earnings being reported, new economic data, and the Federal Reserve discussion about inflation concerns. All these can have a heavy impact on market sentiment so there could be some market volatility later on during the week. In recent months the best cannabis stocks to invest in have seen a sharp decline in market value.
As a result, many leading pot stocks are possibly trading at better price points to start an investment. In the US cannabis companies are delivering first-quarter earnings that show how rapidly the American market is scaling. One sector that has delivered tremendous growth for investors is ancillary marijuana stocks. After significant growth in 2020, these pot stocks have continued to perform well for investors in 2021.
In fact, ancillary marijuana stocks have shown much more stability in the market when compared to vertically integrated cannabis stocks. With more states legalizing cannabis, the industry is expanding across the nation rapidly. In the next five years, a recent BDSA forecast predicts global cannabis sales will grow from $21.3 billion in 2020 to $55.9 billion in 2026. This shows significant growth potential for the next few years.
Top Marijuana Stocks For Long Term Investing
Although last week the cannabis sector began to recover this week, we have many variables to consider that could affect the overall markets. For this reason, this week we might want to keep a close eye on how the best marijuana stocks to invest in react to the market. Regardless of how the market performs these marijuana stocks could have short-term and long-term returns for investors. Specifically, these cannabis companies are leaders in the hydroponic supply and gardening material areas of the market.
As the demand for cannabis across the US continues to increase these companies will support the cultivation of that growth by producing the materials and equipment needed. Because these companies don’t actually work with the cannabis plant, they trade on the major US exchanges. With this in mind let’s do some research into 2 of the top marijuana stocks to add to your watchlist this week.
Marijuana Stocks To Watch:
The Scotts Miracle-Gro Company
In May the Scotts Miracle-Gro Company announced record fiscal second-quarter results with sales increasing 32% driven by strong demand in the companies two major segments. For those that don’t know Scott’s is a leading marketer of branded consumer lawn and gardening products. Its wholly-owned subsidiary Hawthorne Gardening is a leading supplier of nutrients, lighting, and hydroponic equipment. In the second quarter, Hawthorne beat its sales guidance with sales rising 66%. For the fiscal second quarter, Scott’s reported sales of $1.8 billion up from $1.38 billion a year ago. In addition, Hawthorne sales were $363.8 million this was partly due to the company’s fiscal calendar the second quarter ended six days later. As a result, this shift had a sales impact of about $122.5 million.
Because of Hawthorne’s phenomenal start, Scott now expects a sales increase of 30-40% for fiscal 2021 in that segment. For the long-term investor Scott’s currently pays an annual dividend of $2.48 per share with a dividend yield of 1.02%. With exposure to such large consumer markets, Scott’s has also shown significant growth potential for the long term.
SMG stock closed on May 14th at $229.99 and is down 5.78% in the last five trading days. In April SMG stock reached a high of $254.34 and is up 15.49% year to date. According to analysts at CNN Business SMG stock has a 12-month median price target of $300.00 per share. In essence, this represents an increase of 30.54% from current levels. With its long-term potential and exposure to a broader market SMG stock could be a top marijuana stock to add to your long-term portfolio in 2021.
Another company that recently reported a record first quarter for 2021 is GrowGeneration Corp. Currently, the company has 53 organic garden centers across 12 states. Specifically, in the first quarter, the company increased revenue by 173% to $90 million. In addition, comparable-store sales for the quarter grew by 51% from the prior year. For 2021 GrowGen also raised its revenue guidance to $450-$470 million and adjusted EBITDA guidance of $54-$58 million.
The company is also experiencing significant growth in e-commerce revenue increasing 126% to $4.4 million compared to $1.9 million in 2020. In 2021 GrowGen expects to have 60 gardening centers across 15 states. Additionally, the company expects to have over 100 locations in the US by 2026. GrowGen continues to expand rapidly and also has produced substantial gains in the past few years.
GRWG stock increased 632.66% in the last 365 days with a high of $67.75 in February. Closing at $39.93 the stock is down 16.08% in the last 30 days. According to analysts at Tip Ranks GRWG stock has a 12-month average price target of $54.00 per share. This represents a 35.24% increase from current trading levels. As GrowGen continues to outperform its guidance GRWG stock could be one of the best cannabis stocks to buy this week.
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