Is Now A Good Time To Buy Cannabis Stocks Long Term?
Top Marijuana stocks took a significant hit Tuesday as the stock market dipped with tech stocks leading a selloff. For the past few days leading cannabis, stocks have been showing gains in the market. But most of the upward momentum has been lost in today’s trading. With pot stocks trading at lower levels, it could be a good time to start a position in some of the best cannabis stocks to buy.
Because of the market volatility in the cannabis sector-top marijuana stocks are preferred by day traders and swing traders for short-term gains. Although many analysts predict cannabis stocks may have significant long-term gains the volatility makes it difficult for investors. But there are other options for investors who are looking for long-term plays in the cannabis market. Particularly ancillary marijuana stocks have shown more stability when compared to vertically integrated pot stocks.
Ancillary companies are those that support the cannabis industry without touching the actual plant. In fact, one area that could see substantial growth as the cannabis market expands is the hydroponic and agriculture companies. In 2020 some of these cannabis companies produced substantial gains in the market for investors.
Growth In The Cannabis Market
As the cannabis industry expands into new states so does the demand for cannabis. In the US more people have turned to cannabis through the pandemic for recreational use. In addition, these companies are showing strong revenue growth in 2020 which many believe will continue this year. For the long-term investor, some of these cannabis stocks even provide a dividend to investors as an incentive.
With the intention of finding companies to add to your marijuana stock watchlist for May, we can do some research on some companies. With this in mind, let’s take a look at 2 cannabis stocks in the hydroponic and gardening area of the cannabis industry.
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Marijuana Stocks To Watch:
The Scotts Miracle-Gro Company
Although Scott’s is one of the world’s leading marketers of branded consumer lawn products it also has its hand in the hydroponic and indoor growing segments. At the present time, Scott’s has approximately $4.1 billion in sales and is one the most recognizable brands on the market. Through its subsidiary Hawthorne Gardening, the company is a leading provider of nutrients, lighting, and other supplies used for indoor hydroponic growing. Recently, Scott’s updated its outlook for fiscal 2021 and now expects sales growth of 4-6% in its US consumer segment.
In April Scotts announced its board of directors approved a cash dividend of $0.62 per share. This dividend is payable to shareholders holding as of May 27th. Currently, the company has a dividend yield of 1.07% and an annual dividend of $2.48 per share. Companywide sales are expected to see 8-12% growth in 2021. On May 5th Scott’s is expected to report its second-quarter 2021 financial results.
SMG stock is up 16.05% year to date with a high in April of $254.34. Closing on May 4th at $227.98 the stock is down 7.56% in the last month. According to analysts at CNN Business SMG stock has a 12-month median price target of $275 per share. In essence, this would be a 20.96% increase from current levels. For this reason, SMG stock could be a top marijuana stock for long-term investing.
As one of the largest specialty hydroponics suppliers in the U.S. GrowGeneration Corp. has expanded rapidly since 2020. At the present time, the company has 53 retail and distribution centers in the US. Last year, GRWG stock increased over 880% in the market and continued showing positive momentum in 2021. In its most recent earnings report the company announced a record full-year 2020 revenue of $193 million and an adjusted EBITDA of $19.2 million. As far as growth, GrowGen increased its 2021 full-year guidance to approximately $415-$430 million.
Over the course of this year, GrowGen expects to have over 60 retail locations across 15 states. The company also expects to have over 100 locations in the US by 2023. Recently, analysts gave GrowGen an upgrade with a forecast revenue of $428 million this year. Next week GrowGen is expected to announce first quarter 2021 results on May 12th after the close.
GRWG stock is up 8.85% year to date with a high of $67.75 in February. Closing at $42.18 on May 4th the stock is down 13.39% in the last 30 days. According to analysts at Tip Ranks GRWG stock has a 12-month average price target of $63.67 per share. This would be a 50.95% gain from current levels. With this in mind, GRWG stock could be one of the best cannabis stocks to invest in for May 2021.
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