Emerging Opportunities: Top Ancillary Cannabis Stocks for September
As we approach the middle of September 2023, the top ancillary marijuana stocks continue to thrive, propelled by the rising legalization of marijuana and the growing acceptance of its medical and recreational applications. While cannabis farming and distribution companies receive much attention, it’s essential not to neglect the ancillary businesses that help support the overall cannabis ecosystem. These marijuana stocks, which provide essential services and goods to the sector, are primed for major growth and provide unique investment opportunities.
In this article, we will look at some of the top ancillary marijuana stocks investors should watch in mid-September 2023. From cannabis technology suppliers to packaging, research, and other services, these companies are well-positioned to benefit from the industry’s growing trend. As regulations change and the market matures, these ancillary players will become increasingly important in the cannabis industry’s continued expansion.
As the cannabis industry undergoes fast transformation, investors looking for diversification may investigate these ancillary marijuana stocks. In the following sections, we will go into the specifics of some standout companies with the potential to deliver significant returns in the ever-changing world of cannabis-related investments. Whether you’re a seasoned investor or just starting to look at prospects in the marijuana industry, these stocks provide a glimpse into the broader potential of ancillary companies that support the thriving cannabis industry.
Mid-September Insights: Top Ancillary Cannabis Stocks for Investors
- GrowGeneration Corp. (NASDAQ: GRWG)
- Hydrofarm Holdings Group, Inc. (NASDAQ: HYFM)
- Agrify Corporation (NASDAQ: AGFY)
GrowGen is a specialty retail hydroponic and organic growing center owner and operator. GrowGen now has 62 facilities spread over 18 states. In addition, GrowGen also has an online cultivator superstore at growgeneration.com. GrowGen provides and sells a comprehensive range of goods for commercial and home growers, including organic nutrients and soils, cutting-edge lighting technology, 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
- A gross profit margin of 26.8%, a decrease of 1.7% from 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(2)
- Revenue guidance for 2023 is changed to between $220 million and $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 $3.39 on September 13th, up 13.76% in the last month of trading. In addition, GRWG stock has a 52-week range of $2.55-$8.63 and is down 13.76% 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 39.91% increase from its last trading price of $3.39.
Hydrofarm Holdings Group, Inc.
Hydrofarm is a leading independent manufacturer and distributor of branded hydroponics equipment and supplies for controlled environment agriculture, including grow lights, climate control solutions, growing media, and nutrients, in addition to a diverse portfolio of proprietary and innovative branded products. Overall, Hydrofarm has been assisting producers in making growing easier and more productive for over 40 years. The company aims to provide products that will help growers, farmers, and cultivators improve the quality, efficiency, consistency, and speed of their growth projects.
Second Quarter 2023 Highlights vs. Prior Year Period:
- Net sales decreased to $63.1 million compared to $97.5 million.
- Gross Profit increased to $14.5 million compared to $7.3 million. Gross Profit Margin increased to 23.0% of net sales compared to 7.5%.
- Adjusted Gross Profit(1) increased to $17.0 million compared to $9.1 million. Adjusted Gross Profit Margin(1) increased to 27.0% of net sales compared to 9.3%.
- Net loss was $12.9 million compared to net loss of $203.3 million.
- Adjusted EBITDA(1) increased to $2.5 million compared to $(6.8) million.
- Cash from operating activities of $9.9 million and Free Cash Flow(1) of $8.3 million.
- Updated Full Year 2023 Outlook:
- Net sales of approximately $230 million to $240 million.
- Adjusted EBITDA(1) that is modestly positive.
- Positive Free Cash Flow(1).
HYFM Stock Performance
HYFM stock closed at $1.27 on September 13th, up 24.51% in the last month of trading. At present, HYFM stock has a 52-week price range of $0.6720-$3.25, down 18.06% year to date. According to analysts at CNN Business, HYFM stock has a 12-month median price target of $1.27. In this case, this would represent an increase of 0.39% from its last trading price of $1.27.
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Agrify Corporation, situated in the United States, provides dependable machinery and software to the indoor farming industry. Vertical farming systems, integrated grow racks, and LED grow lights are all available from the company. Agrify’s cutting-edge software and technology solutions allow organizations to operate at the highest levels of dependability, effectiveness, and quality at the lowest possible cost. Consulting, engineering, and building are among the services provided by the company. Precision Extraction Solutions and Cascade Sciences, two well-known providers of technologies and services for assessing, processing, and extracting hemp and cannabis, were both recently purchased by the company. In February, the corporation spent $10 million on Lab Society, a pioneer in cannabis extraction, distillation, and solvent separation technology.
Revenue at Agrify decreased from $15.8 million in 2021 to $7.0 million in the third quarter of 2022. Revenue climbed by 51.4% this year, from $34.6 million to $52.4 million. The third-quarter gross loss was $(4.1) million, or (58.6%) of revenue, compared to $(380) thousand, or (2.4%) in the previous year’s same period. Gross profit (loss) for the most recent quarter was $1.7 million, or 3.2% of revenue, compared to $393 thousand, or (1.1%) of revenue in the prior year-to-date quarter. In fiscal year 2022, Agrify expects adjusted revenues of $65 million to $70 million. In July, the company did a 1-20 reverse stock split. The reverse stock split is intended to increase the per share trading price of the Company’s common stock to enable the Company to satisfy the minimum bid price requirement for continued listing on the Nasdaq Capital Market.
AGFY Stock Performance
AGFY stock closed on September 13th at $3.10, up 21.09% in the past month of trading. The stock has a range of $2.00-$416 and is down 53.45% year to date. According to analysts at CNN Business, AGFY stock has a median price target of $33.50 per share. In this case, this would represent an upside of 980.65% from its last trading price of $3.10.
Investor’s Guide to Ancillary Cannabis Stocks in September 2023
Ultimately, as the cannabis industry evolves and legal landscapes change, the ancillary firms that support this thriving sector are emerging as hidden treasures for investors. The top ancillary cannabis stocks identified in this watchlist for mid-September 2023 provide a glimpse into the market’s varied potential. From technology suppliers optimizing cannabis operations to creative packaging solutions and research businesses expanding the industry’s knowledge base, these companies are well-positioned to capitalize on the cannabis industry’s continuous expansion.
These ancillary companies represent a viable route for growth as investors explore ways to diversify their portfolios and capitalize on the possibilities of the cannabis market. While the attention is typically on cannabis producers, it is critical to recognize the essential roles that these supporting businesses perform. By keeping a close eye on these ancillary cannabis businesses, investors can benefit from the cannabis industry’s overall growth and the growing need for specialized products and services in this dynamic sector.
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