Making An Investment In Top Cannabis Stocks In 2021
Have you been watching top marijuana stocks to buy looking for the best entry-level? Currently, most of the best cannabis stocks to invest in have seen significant drops in value. For the past few months, we have seen a significant pullback from the cannabis sector’s highs in February. At the start of June, many top pot stocks began to recover some value only to give it back as the month progressed. But all this consolidation has created a new bottom for the best marijuana stocks right now.
With this in mind, this could be a good opportunity to find the best marijuana stocks to invest in for the long term. Investing in marijuana stocks for the long term requires some research into the cannabis sector. For one top marijuana stocks are traditionally known for displaying extreme market volatility. Because of this volatility many investors prefer trading marijuana stocks using short-term methods.
But top analysts are predicting significant growth for the cannabis industry in the next five years. According to a recent report from Fortune Business Insights, the global cannabis industry is projected to reach $97.35 billion. This would represent a CAGR of 32.92% and the increases would come from medical and therapeutic purposes for cannabis use.
Better Marijuana Stocks For The Long term
But there is an area of the cannabis sector that has displayed more stability for investors. Ancillary marijuana companies are companies that support the cannabis industry without touching the actual cannabis plant.
Since 2020 some of these companies have shown substantial growth as the cannabis industry has expanded. An example of ancillary cannabis stocks that’s performed well for investors is GrowGeneration Corp. (NASDAQ:GRWG). In fact, GRWG stock has gained 887.35% in its past 3-year performance.
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Now as most of the cannabis sector is trading near their lowest values in 2021 these pot stocks present an opportunity to start a long-term investment. With this in mind, we can start researching some of the top ancillary marijuana stocks in the market. In the next five years, these marijuana stocks could produce substantial long-term returns for cannabis investors.
Marijuana Stocks To Watch
- The Scotts Miracle-Gro Company (NYSE:SMG)
- Hydrofarm Holdings Group, Inc. (NASDAQ:HYFM)
The Scotts Miracle-Gro Company
For investors not familiar with The Scotts Miracle-Gro, the company is a leading marketer of branded consumer lawn and gardening products. In particular, its wholly-owned subsidiary Hawthorne Gardening is a leading supplier of nutrients, lighting, and hydroponic equipment used for growing cannabis. Recently, in the second quarter, Hawthorne beat its sales guidance with sales rising 66% from the prior year to $363.8 million. Hawthorne segment profits increased 74% year over year to $41.4 million. In addition, for the fiscal second quarter, Scott’s reported sales of $1.8 billion up from $1.38 billion a year ago.
At the present time, due to Hawthorne’s performance, Scott’s now expects a sales increase of 30-40% for fiscal 2021 in that segment. Additionally, for the long-term investor Scott’s pays an annual dividend of $2.48 per share with a dividend yield of 1.23%. In essence, the company provides investors with exposure to the cannabis industry and the consumer gardening industry. Hawthorne segment profits increased 74% year over year to $41.4 million. In June Scott’s announced companywide sales growth is expected to grow by 17-19% for the year.
SMG stock is trading at $191.76 on June 23rd down 1.19% year to date. In April SMG stock reached a new 52 week high of $254.34 per share. According to analysts at CNN Business SMG stock has a 12-month median price target of $280.00 per share. In essence, this would represent an increase of 45.86% from its current trading level. For this reason, SMG stock could be one of the best marijuana stocks to buy for the long term.
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Hydrofarm Holdings Group, Inc.
In the world of gardening Hydrofarm Holdings Group, Inc. is a distributor and manufacturer of hydroponics equipment and supplies for controlled environment agriculture. Last year Hydrofarm became a publicly-traded company entering the market as a traditional IPO that saw substantial gains from its introduction. Primarily, the company manufactures and sells high-intensity grow lights, climate control solutions, and has a large portfolio of branded products for gardening.
In May the company announced it completed the acquisition of a premium nutrient maker Heavy 16. Additionally, this month the company entered into an agreement to acquire Aurora Innovations and its organic nutrients. In its first-quarter 2021 financials, Hydrofarms saw net sales increase 66.5% to $111.4 million compared to $66.9 million year over year. The company saw gross profits increase 100.8% to $23.2 million or 20.8% of net sales. Also, the company revised its full-year 2021 outlook with net sales growth of 30%-40% and adjusted EBITDA of $36-$42 million.
HYFM stock is trading at $54.79 on June 23rd up 5.59% year to date. In February HYFM stock reached a 52-week high of $95.48 and is trading relatively flat in the past five days. According to analysts at Tip Ranks HYMF stock has a 12-month average price target of $74.50 per share. This would be an increase of 36.05% from its current trading price. With 40 years in business, Hydrofarm could be a long-term investment candidate. Making HYFM stock a top marijuana stock to possibly add to your long-term portfolio.
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