Hey There Income Hunters,
The No. 1 stock on my list to crush it in the cannabis boom is a company that never even comes in contact with plants at all.
This company will be the “Home Depot of the cannabis industry” — and potentially much bigger than any one producer.
What’s more, the stock rose 940% in a recent 12 month period and now has plenty of room to get, well, higher.
So, what company am I adding to my portfolio?
Introducing Grow Generation (Ticker: GRWG)
GRWG is currently the largest hydroponics supplier in the country. The company operates 52 stores in 12 states and plans to double in size by 2023.
Beyond physical retail outlets, the company runs a robust e-commerce setup and recently acquired B2B integrated platform Agron.io. This addition arms GRWG with a platform that allows commercial growers to manage their purchasing and logistics under a single umbrella.
GRWG has quickly become a one-stop shop for growers of all sizes, able to assist with complex issues of planning, growing and sustaining a commercial agriculture facility.
The company’s stock rose 940% over a recent 12-month period, but as the industry continues to wait for federal decriminalization, the stock has corrected almost 40%, so now is the time to get involved …
Any emerging industry has a bit of a Wild West component, so comprehensive due diligence is critically important for #IncomeHunters. Let’s take a closer look at GRWG’s strategy, management team, financials and risks.
Power Income Snapshot
- Increasing in-store sales through organic growth, with a focus on growing private-label products to expand profit margins.
- Investing in and expanding the supply chain through new store openings and acquisitions.
- Forming partnerships with the biggest brands in the industry and offering a direct-to-farm delivery service and equipment financing.
CEO and co-founder Darren Lambert boasts nearly three decades of experience as a hedge fund manager and attorney. That’s a pretty powerful combination for negotiating deals. No wonder GRWG has been so aggressive in acquiring companies.
But here is where I see some real value in management:
Senior strategist Bob Nardelli is the former chairman and CEO of The Home Depot (Ticker: HD).
I believe this shows how serious the company is about growth. And the aggressive acquisitions GRWG has made gives me confidence in its ability to be a dominant player in this industry for a long time …
The information below is from the GRWG investor presentation, which is pretty powerful and worth reviewing …
Earnings and Revenue Growth
I like to see 20% earnings and at least 20% revenue growth, and you have both here. GRWC is especially strong on a relative basis to their industry and the market …
This is one area I will watch. It’s not a negative sign at this point because GRWC has very little debt and excellent growth.
However, if shares outstanding continues to grow it would be a red flag that the company is being destructive with its capital.
- Shareholder dilution
- Further delays to federal decriminalization
Technical Setup …
GRWG put in an all-time high at $67.75 on Feb. 10 and has since corrected by nearly half.
The stock held the 200-day moving and is consolidating just above it. This is a good setup to put on a bullish strategy. If the price closes below the 200-day MA you can close out the trade.
Legalization on the federal level is inevitable, so setting a position in this area is an excellent opportunity with GRWG, which is already profitable and has recurring revenues.
GRWG has weekly and monthly options, which gives you multiple choices for option strategies.
Bring It Home
GrowGeneration is the perfect combination of a uniquely positioned business with a great strategy for growth.
As legalization sweeps across the country, the company is in for a much greater upside.
GRWG is in a stable position right now, making it the perfect time to buy-in and benefit from upcoming tailwinds.
The company has its sights set on a “blue ocean strategy” — meaning they are going after uncontested market space and pursuing a rate of growth that could make competition irrelevant.
They’re also creating new demand by providing a turnkey solution for interested entrants.
Lastly, they offer so much value they could break the value-cost trade-off.
I’m excited to go along with them for the ride.
Stay tuned tomorrow when we’ll look at the company I think is well positioned to be the dominant producer and dispenser of both medicinal and recreational cannabis.
Until then …
Live and Trade With Passion My Friends,