Tobacco stocks have always been a great investment opportunity, even if you don’t actually smoke. Whether you love it or hate it, there’s no denying that smoking is a big industry, with giants like Altria, RJ Reynolds, and Philip Morris leading the pack. That being the case, it’s no surprise that cannabis stocks are becoming a popular investment as well.
The cannabis industry threw a party this week as the industry was in celebration of the first full quarter of sales for adult-use cannabis in the U.S., which is projected to hit $6.7 billion in revenue this year. The stock market also saw record-breaking milestones, as investors continue to bet big on the industry. Shares of Canopy Growth Corp. (NYSE: CGC) jumped 8% to $42.17 in after-hours trading after the company reported Q1 results that exceeded analyst expectations. The company has also raised its full-year revenue guidance to about $40 billion. ~
GrowGeneration share increases by 615% year-on-year
GrowGeneration Corp (NASDAQ:GRWG) could be an ideal stock for those who don’t want to invest directly in cannabis. Many investors overlook GrowGeneration’s impressive long-term growth potential, likely because the company is one of those stocks where you have to step it up a notch. The company provides hydroponic tools to cannabis growers of all sizes, from hobby gardeners to multi-state operators. It may not sound as exciting as growing weed, developing cannabis products or running dispensaries, but it is the backbone of the industry. The company recently announced record results for the first quarter, with sales per store up 51%. GrowGeneration Corp. made nine acquisitions this year and added 15 hydroponics companies, bringing the company’s total number of companies to 53. And this is just the beginning. Although marijuana is still illegal at the federal level in the United States, the legalization of recreational cannabis is possible. And GrowGeneration will be there to support the green wave. He already has a big advantage. As you can see from the chart below, it would be a big mistake to ignore GrowGeneration shares. It may be a simple extraction operation, but it has surpassed the country’s largest marijuana companies in several states. Graph courtesy of StockCharts.com GRWG shares have had a nice run since the stock market’s low in March 2020. Since then, GrowGeneration’s shares have risen 1420%. GRWG shares are also up 620% year-on-year and 39% over the past six months. GrowGeneration stock is currently down 0.4% and is expected to rise about 70% in 2021 to its highest price of $67.75 in February. According to Wall Street, this will happen sometime next year. Of the eight analysts that provided 12-month price forecasts for GrowGeneration Corp shares, the median estimate is $57.50, up 43.7% from the current price. The maximum estimate is $77, a potential increase of 92.5% over current levels. Graph courtesy of StockCharts.com
GrowGeneration operates the largest network of garden centers in the United States, with 53 locations in 12 states. The company also operates an online garden and hydroponics store. (Source: Investor Presentation GrowGeneration Corp, April 1, 2021). The company offers and sells thousands of products, including organic nutrients and soils, advanced lighting technology and state-of-the-art hydroponic equipment. The company also sells private label products, which are expected to account for 10% of its total sales by 2021. The company’s supply chain currently includes 900,000 square feet of retail and warehouse space in 13 states. GrowGeneration Corp. is expanding its operations. The company expects to increase the number of its garden centers to 60 by 2021 and 100 by 2023. The company says it aims to own and operate GrowGeneration stores in every major state in the United States and Canada. This strategy has become one of the key drivers of the company’s growth. GrowGeneration Corp is not only opening its own stores, but also pursuing an aggressive acquisition strategy. In 2020 alone, the company announced more than 10 strategic acquisitions that generated $100 million in revenue. The company has the same growth targets for 2021. During the first quarter of 2021, GrowGeneration:
- Indoor Garden & Lighting, a chain with two stores in Seattle and Tacoma, Wash.
- Grow Depot, a chain with two stores in Auburn and Augusta, Mass.
- Grow Warehouse, a chain of four stores in Colorado and Oklahoma.
- San Diego Hydroponics & Organics, a chain of four stores in San Diego, CA.
- 55 Hydroponics, which is based in Santa Ana, Calif.
- Aquarius Hydroponics, which is based in Springfield, Massachusetts.
- Agron LLC, an e-commerce company for commercial agricultural producers.
The 9th. In March, GrowGeneration announced the opening of 52,000 square feet in downtown Los Angeles and 70,000 square feet in Rancho Dominguez, California. The company is building several fulfillment centers, including 25,000 square feet in Phoenix, Arizona, and 58,000 square feet in Medley, Florida. The opening of these locations is planned for this summer. In April, GrowGeneration Corp. Downriver Hydroponics acquired a garden center in Wayne County, Michigan. Also in April, the company entered into a lease for 40,000 square feet of space in Jackson, Massachusetts. Mississippi is the 13th. State where GrowGeneration is active. In May, GrowGeneration announced the construction of its sixth facility in Ardmore, Oklahoma.
An exceptionally strong start to 2021
GrowGeneration announced record revenue of $90 million for the first quarter of 2021, 173% higher than the $33 million in the same period last year. (Source: GrowGeneration announces record first quarter 2021 results and raises 2021 outlook, GrowGeneration Corp, May 12, 2021) The company’s comparable sales increased 51% in the quarter. E-commerce revenue was $4.4 million, up 126% from $1.9 million in the first quarter of 2020. GrowGeneration Corp. also reported record net income in the first quarter of 2021 of $6.1 million, or $0.10 per share, compared to a net loss of $2.0 million, or $0.06 per share, in the first quarter of 2020. The company’s adjusted earnings before interest, taxes, depreciation and amortization (EBITDA) were $11.1 million, compared to $2.4 million in the same period last year. Darren Lampert, co-founder and CEO of GrowGeneration Corp, looks ahead: Based on our strong performance, we are raising our financial outlook for this year and expect revenues to be between $450 million and $470 million in 2021, more than double the revenues in 2020. In addition, at these estimated sales volumes, adjusted EBITDA for 2021 is now estimated at $54 million to $58 million. (Source: Ibid).
GrowGeneration Corp remains one of the most impressive companies in the cannabis industry. It opened new stores, made acquisitions and reported record financial results. The company also raised its outlook for the full year. 2020 was an extraordinary year for GrowGeneration stock, and it looks like 2021 and beyond will be monumental as well.
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