As is often said, a rising tide lifts all boats. The cannabis industry’s tide is rising, helping to buoy GRWG and SMG. Both of these ancillary cannabis stocks may outperform many of the comparably pure cannabis plays in the year moving forward and also across posterity.
Let’s take a closer look at whether GRWG or SMG is the better ancillary cannabis play for the year ahead.
How GRWG and SMG Make Money
GRWG owns and operates hydroponic stores that facilitate the efficient growing of cannabis plants. GRWG also has organic gardening stores to boot. GRWG sells products ranging from grow lights to organic soils, organic nutrients, and cutting-edge hydroponic equipment. GRWG’s equipment is used indoors and outdoors. In fact, both home growers and commercial growers both rely on GRWG for growing supplies.
SMG is well-known for its lawn fertilizers. However, SMG also makes money by selling hydroponics and other products that allow for efficient cannabis plant growth. SMG’s tentacles even extend to gardening, grass, and landscaping products.
In short, neither of these companies directly makes money from the growth or sale of cannabis plants. Rather, both provide cannabis growers with the equipment necessary to grow cannabis affordably, quickly, and easily.
The Analysts’ Take on GRWG and SMG
GRWG has been closely reviewed by seven analysts. These professionals have established a high price target of $65, an average price target of $52.71, and a low price target of $27. Across the past 90 days, the average analyst price target for GRWG has trended upwards by about $2.34 each week.
Of the seven analysts who have issued recommendations for the GRWG, three advise holding, two consider the stock a Buy, and two consider it a Strong Buy. It is particularly interesting to note the average analyst price target for the stock surpasses that of more than 87% of small-cap stocks. Furthermore, GRWG’s upside potential is greater than 23% of small-cap stocks.
The analysts have established an average price target of $273 for SMG. The lowest analyst price target for the stock is $260. The highest analyst price target for the stock is $290. If SMG hits the average analyst price target, it will have climbed by about 14%. Across the past 240 days, the average price target for SMG has trended upward, spiking by about $5.89 every two weeks. Of the seven analysts who have issued recommendations, three consider SMG to be a Buy, two consider it a Hold, and two consider it a Strong Buy.
GRWG and SMG POWR Ratings
SMG is a POWR Ratings success story. The stock has an overall POWR Rating of B meaning it is a Buy. SMG also has B grades in the Quality and Sentiment components. You can find out more about how SMG fares in the Momentum, Value, and Stability components of the POWR Ratings by clicking here. Of the 64 stocks in the Home Improvement & Goods space, SMG is ranked 33rd. If you are curious about this industry, click here to find out more.
GRWG has an A grade in the Momentum component of the POWR Ratings along with a B grade in the Growth component. Investors who would like to know how GRWG fares in the remaining POWR Ratings components such as Quality, Sentiment, and Stability can do so by clicking here.
Which is the Better Play?
SMG is the better play as it has comparably diverse revenue streams. Another player could easily capture some of GRWG’s market share yet the same feat would prove quite difficult for SMG’s competitors as SMG is a well-established business with multiple revenue streams.
GRWG’s forward P/E ratio of 149.08 is also concerning. In comparison, SMG has a forward P/E Ratio of 28.03. However, there is a strong argument to be made for both of these ancillary cannabis stocks. Buy either SMG or GRWG, hold it for years and you will likely be satisfied with the return.
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GRWG shares were trading at $56.86 per share on Wednesday morning, down $3.72 (-6.14%). Year-to-date, GRWG has gained 41.37%, versus a 4.28% rise in the benchmark S&P 500 index during the same period.
About the Author: Patrick Ryan
Patrick Ryan has more than a dozen years of investing experience with a focus on information technology, consumer and entertainment sectors. In addition to working for StockNews, Patrick has also written for Wealth Authority and Fallon Wealth Management. More...
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