Ross Healy
Scotts Miracle-Gro Company
SMG-N
DON'T BUY
Oct 12, 2018
The company has a hydroponic division that is getting into cannabis. He thinks cannabis is a busy space with 168 companies now claiming activity in the field. His analysis suggests (based on Colorado’s experience) the sector will face rapidly plateauing sales after the first couple of years. About 6% of the population turned out to be regular users and 80% of the population doesn’t care. He would not buy this based on their entry into cannabis.
It is a way to play its core business of plant feed and herbicides. Cannabis adds a sex appeal. He would look at it again at the right price. At 15-16 PE it is appropriate to buy it. It has brand and some growth.
Agriculture is one of the big themes he's pursuing. He's been using MOO, which has been making relative strength new highs. Agriculture has recently been breaking out to new highs. SMG would fit in here. Technically, a good time to buy. Looks very, very good through $220. Also owns NTR.
They report Wednesday. Gardening was a hobby that exploded during the pandemic and he expects that trend to carry over this season. The at-home cannabis market will also have an effect.
THE leader in lawn and garden care. The stock did well during the pandemic. It will be a consistent cash flow generator. It is also involved in hydroponics, which may eventually be spun off. a great price here. Yield 1.73% (Analysts’ price target is $196.50)
Are debt and family control of concern? Free cashflow generator. Reducing debt. Weakness in cannabis sector has weighed on the hydroponics division. Well run. Best brand in the business by far. Great business. Quite bullish on it.
The company has a hydroponic division that is getting into cannabis. He thinks cannabis is a busy space with 168 companies now claiming activity in the field. His analysis suggests (based on Colorado’s experience) the sector will face rapidly plateauing sales after the first couple of years. About 6% of the population turned out to be regular users and 80% of the population doesn’t care. He would not buy this based on their entry into cannabis.