Investing In Cannabis Stocks In Q3 2021
Have you been watching top marijuana stocks to buy this summer? In July many of the best cannabis stocks to invest in began trading at their lowest prices of 2021. For new investors, this could be a good time to find top pot stocks at better entry points this year. As we begin trading in August the best marijuana stocks have begun to see some upside in the market. For the most part, one area of marijuana stocks that’s delivered significant returns for investors is ancillary marijuana stocks.
Ancillary companies are those companies that support the cannabis industry without touching the actual plant. Since the advent of the pandemic, this part of the cannabis sector has seen significant growth and expansion. In the first quarter, these companies also reported strong earnings and have shown more stability than the vertically integrated cannabis stocks.
As the cannabis industry grows these companies are well-positioned to grow with the market. Recently, these leading nutrient and hydroponic supply companies have been expanding rapidly through M&As in the US and Canadian markets. As it stands, many analysts predict the cannabis industry will see legal cannabis sales more than double in the next five years. As cannabis demand increases so will the need for the lighting equipment and organic nutrients needed to produce high-quality marijuana.
Understanding the Cannabis Market And Making A Pot Stock List
For new investors, it’s always important to do your due diligence on a company before investing. Researching a company’s financials and watching how the stock performs in the market can help you make better investment decisions. When it comes to these top ancillary marijuana stocks leading money managers and hedge funds prefer these cannabis stocks for long-term investing.
In 2020 ancillary cannabis stocks saw substantial upside that has continued in 2021. Although the US has not federally changed its ancient policy on cannabis on the state level most of the country has a medical or adult recreational cannabis market in place. With most US cannabis companies reporting earnings in August, we could continue to see some upside with top marijuana stocks.
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For those investors using Robinhood or Webull, these could be some of the top pot stocks for your list right now. With this in mind, we can take a closer look at some of the top ancillary marijuana stocks supplying lighting and hydroponic equipment to the cannabis industry. From current levels, many analysts see significant upside for these pot stocks. In any case, these could be the best cannabis stocks to buy for the long term in August.
Top Marijuana Stocks For Your Watchlist In August
- GrowGeneration Corp. (NASDAQ:GRWG)
- Hydrofarm Holdings Group, Inc. (NASDAQ:HYFM)
GrowGeneration Corp
At the present time, GrowGeneration Corp. is a leading owner and operator of retail hydroponic and organic gardening stores across the US. GrowGen markets and distributes organics, lighting, and hydroponic equipment to assist in the growing process mainly used by cannabis cultivators. Currently, the company has 65 organic garden centers across 12 states recently opening its 6th store in Michigan. Growgen’s first quarter 2021 financials had revenue up by 173% to $90 million. For 2021 Grow Gen has raised its revenue guidance to $450-$470 million and an adjusted EBITDA guidance of $54-$58 million.
The company has also been working on its online presence with the launch of GrowGeneration.com. Specifically, the company has launched a newly redesigned e-commerce platform. The site is a one-stop-e-commerce destination with over 10,000 products ranging from nutrients to lighting technology. In the next five years, the company is expecting to have over 100 locations operating in the US. The company is expected to release its second-quarter 2021 earnings on August 12th before the bell.
GRWG stock closed on August 3rd at $40.98 up 1.72% year to date. The stock has gained 359.66% in its 1-year performance and has a 52-week price range of $8.44-$67.75. According to analysts at CNN Business GRWG stock has a 12-month average price target of $57.50 per share. In essence, this forecast represents gains of 40.31% from its last trading price of $40.98. For this reason, GRWG stock could be a top marijuana stock to add to your watchlist this week.
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Hydrofarm Holdings Group, Inc.
Hydrofarm Holdings Group, Inc. is another leading distributor and manufacturer of hydroponics equipment and supplies for controlled environment agriculture. In specific, the company offers an extensive variety of equipment that facilitates the cannabis growing process. Primarily, the company offers high-intensity grow lights, climate control solutions, and growing media, as well as a broad portfolio of innovative and proprietary branded products. For some history, Hydrofarms has been in business for over 40 years helping growers in the US and Canada achieve premium-quality farming products.
In the first quarter of 2021, Hydrofarm reported net sales up 66.5% to 111.4 million. As a result, the company saw gross profit increase by 100.8% to $23.2 million or 20.8% of net sales. Also, Hydrofarm revised its full-year 2021 outlook to net sales growth of 30-40% and adjusted EBITDA of $36-$42 million. In July the company announced it completed the acquisition of Aurora Innovations and its organic nutrients and grow media operations. On August 3rd the company announced the acquisition of a leading Canadian nutrient company Greenstar Plant Products, Inc. This acquisition continues Hydrofarms efforts to acquire manufacturers of branded products in key CEA categories.
HYFM stock closed at $49.02 On August 3rd and is down 6.77% year to date. The stock has a 52-week price range of $41.59-$95.48 and is down 13.42% in the last month. According to analysts at Tip Ranks HYFM stock has a 12-month average price target of $69.00 per share. This forecast would represent an increase of 40.76% from its last trading price of $49.02. As the cannabis industry continues to grow rapidly HYFM stock could be the best cannabis stock to invest in for the long-term hold.
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