Scotts Miracle-Gro Co: A Contrarian Play for Pot Stock Investors?

斯科特奇迹-格罗公司:大麻股票投资者的逆势游戏?

2021-08-10 20:30:20 PROFIT

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In today’s market, there are likely way more trend followers than contrarian investors. It’s human nature: when a stock is soaring, people want to get in on the action, even if things are already going parabolic and pullbacks could be imminent. The fear of missing out (FOMO) has led plenty of investors to buy at the top. When a stock is tumbling, on the other hand, investors tend to bail because of the fear that it could drop further. The marijuana sector is probably one of the best places to see this kind of behavior. Pot stocks were all the rage after the U.S. presidential election in November 2020. The entire sector enjoyed an incredible rally. Then the meme stock frenzy in early 2021—thanks to the enthusiasm of millions of Redditors—only added fuel to the fire. People simply didn’t want to stand on the sidelines. But, like most parabolic runs, that rally didn’t last forever. The pullback in pot stocks happened after the segment’s peak in February 2021. And now, the mainstream media doesn’t talk much about pot stocks—whereas just a few months ago, even the smaller pot stocks would get national attention because of their massive daily gains. So it takes a special kind of pot stock investor to appreciate what Scotts Miracle-Gro Co (NYSE:SMG) is doing right now. The first thing to note about Scotts Miracle-Gro stock is that it’s not a pot stock in the traditional sense. The company doesn’t grow, process, or sell any pot. Instead, it’s known as one of the world’s largest marketers of branded consumer products for lawn seed and garden care. In particular, Scotts Miracle-Gro Co’s “Scotts,” “Miracle-Gro,” and “Ortho” brands are market leaders in their categories. But the company is on board the marijuana profit train thanks to its wholly owned subsidiary, Hawthorne Gardening Company. Hawthorne is a leading provider of nutrients, lighting, growing media, supplements, and other materials used in the indoor and hydroponic growing segment. With the rise of the legal cannabis industry, the demand for hydroponic growing products has increased substantially in recent years. As a leading distributor of such products, Hawthorne has become a growth machine. Just look at these figures and you’ll see why SMG stock deserves the attention of pot stock investors. In the company’s fiscal year 2020, which ended September 30, 2020, Hawthorne generated $1.1 billion of sales, representing a 61% increase year-over-year. (Source: “ScottsMiracle-Gro Announces Record Fourth Quarter and Full Year Results Driven by Strong Product Demand in Both Major Reporting Segments,” Scotts Miracle-Gro Co, November 4, 2020.) Company-wide sales totaled $4.1 billion for fiscal 2020, which was up by 31% year-over-year. In Scotts Miracle-Gro’s biggest segment, U.S. Consumer, its sales increased by 24% year-over-year to $2.8 billion. In other words, while Hawthorne wasn’t Scotts Miracle-Gro Co’s biggest segment, it was a major growth driver for the company. In terms of share price, Scotts Miracle-Gro stock enjoyed a huge rally from late 2020 to early 2021—just like other pot stocks. SMG stock pulled back in late February but had another round of surges in March and reached more than $250.00 per share in early April. Then, Scotts Miracle-Gro stock seemed to lose its upward momentum and started trending down. At the time of this writing, SMG stock trades at $162.37 per share, roughly $90.00 below its all-time high. Chart courtesy of StockCharts.com The technicals don’t look very bullish in the above SMG stock chart, as the past highs could form a major top. But Scotts Miracle-Gro stock does seem to be extremely oversold based on the reading of the relative strength index (RSI). Considering the size of this downward move already, SMG stock might be a good opportunity for contrarian investors. Scotts Miracle-Gro stock’s latest price drop was on August 4, which was the day the company released its latest earnings report. The report showed that, in the third quarter of its fiscal year 2021, which ended July 3, the company generated $1.6 billion of sales, representing an eight-percent increase year-over-year. (Source: “ScottsMiracle-Gro Announces Record Third Quarter Financial Results; Reaffirms Sales and Earnings Guidance for Fiscal 2021,” Scotts Miracle-Gro Co, August 4, 2021.) Sales from the U.S. Consumer segment declined from $1.09 billion to $1.05 billion—a four-percent drop. However, the Hawthorne segment sales surged from $285.7 million to $421.9 million. That’s a 48% increase! Simply put, while Scotts Miracle-Gro Co’s biggest segment showed a drop in sales in the reporting quarter, growth from its cannabis-driven business more than offset that decline. The company has also announced a new acquisition: Hawthorne will be acquiring HydroLogic Purification Systems for $65.0 million. HydroLogic is a leading provider of products, accessories, and systems for water filtration and purification in the cannabis industry. The transaction, which will expand Hawthorne’s brand portfolio with water filtration and purification products, is expected to add approximately $20.0 million in annualized sales to the company. Scotts Miracle-Gro Co’s management has clearly identified cannabis as the next big opportunity for the company. In its latest earnings conference call, the company’s chief executive officer, James S. Hagedorn, said, “Our evolving vision is to create the optionality to have an early mover advantage in the broader U.S. cannabis market when federal law allows.” (Source: “FQ3 2021 Earnings Call Transcripts,” Scotts Miracle-Gro Co, August 4, 2021.) He continued, “There is little doubt this industry is poised for significant growth. And given our track record, I believe we have an absolute right to win here.” For full-year fiscal 2021, management has maintained their guidance of 17% to 19% growth in company-wide sales. Specifically, the U.S. Consumer segment is expected to grow by seven to nine percent, while Hawthorne’s sales are projected to rise by 40% to 45%. On the day of Scotts Miracle-Gro Co’s latest earnings report, SMG stock tumbled by 6.7%. But, as just mentioned, the actual results—and guidance—weren’t bad at all. And considering the outlook for the cannabis industry, Hawthorne should have no problem continuing to drive growth for Scotts Miracle-Gro. Bottom line: it’s hard to say when sentiment will turn bullish toward Scotts Miracle-Gro stock. But as it stands, the situation at the company could represent a good opportunity for contrarian investors who want to get some exposure to the cannabis industry.
在今天的市场上,趋势追随者可能比逆势投资者多得多。这是人之常情:当一只股票飙升时,人们想要参与其中,即使事情已经开始抛物线化,回调可能迫在眉睫。 对错过的恐惧(FOMO)导致大量投资者在顶部买入。另一方面,当一只股票暴跌时,投资者往往会因为担心它可能会进一步下跌而退出。 大麻部门可能是看到这种行为的最佳场所之一。 2020年11月美国总统选举后,大麻股风靡一时。整个板块享受了令人难以置信的反弹。然后,2021年初的迷因股狂潮--多亏了数百万红人的热情--只会火上浇油。人们根本不想袖手旁观。 但是,像大多数抛物线跑一样,这种反弹并没有永远持续下去。大麻股的回调发生在2021年2月该领域达到峰值后。现在,主流媒体不太谈论大麻股票--而就在几个月前,即使是较小的大麻股票也会因其每天的巨大涨幅而受到全国的关注。 因此,需要一种特殊的股票投资者来理解斯科特奇迹-格罗公司(纽约证券交易所代码:SMG)目前的所作所为。 关于Scotts Miracle-Gro股票,首先要注意的是,它不是传统意义上的大麻股票。 该公司不种植、加工或销售任何大麻。相反,它是世界上最大的草坪种子和花园护理品牌消费品营销商之一。特别是Scotts Miracle-Gro公司的“Scotts”、“Miracle-Gro”和“Ortho”品牌在其类别中处于市场领先地位。 但由于其全资子公司霍桑园艺公司,该公司登上了大麻利润的列车。 霍桑是一家领先的营养素、照明、生长介质、补充剂和其他用于室内和水培生长领域的材料的供应商。 随着合法大麻产业的兴起,近年来对水培生长产品的需求大幅增加。作为此类产品的领先分销商,霍桑已成为一台增长机器。 只要看看这些数字,你就会明白为什么SMG的股票值得重点股票投资者的关注。 在截至2020年9月30日的2020财年,霍桑创造了11亿美元的销售额,同比增长61%。(来源:“ScottsMiracle-Gro宣布创纪录的第四季度和全年业绩,受两个主要报告部门强劲产品需求的推动,”ScottsMiracle-Gro公司,2020年11月4日。) 2020财年,全公司销售额总计41亿美元,同比增长31%。在Scotts Miracle-Gro最大的细分市场--美国消费者领域,其销售额同比增长24%,达到28亿美元。 换句话说,虽然霍桑不是斯科特奇迹-格罗公司最大的细分市场,但它是该公司的主要增长驱动力。 就股价而言,斯科特奇迹-格罗股票从2020年底到2021年初大幅上涨--就像其他大麻股票一样。竞彩股价在2月底回落,但在3月又出现了一轮飙升,4月初达到每股250.00美元以上。 然后,斯科特奇迹-格罗的股票似乎失去了上涨势头,开始趋势性下跌。在撰写本文时,SMG的股价为每股162.37美元,比历史高点低约90.00美元。 图表由stockcharts.com提供 在上述SMG股票图表中,技术股看起来不太乐观,因为过去的高点可能会形成一个主要的顶部。但根据相对强弱指数(RSI)的读数,斯科特奇迹-格罗股票似乎确实极度超卖。考虑到这次下跌的规模,竞彩股票可能是逆势投资者的一个好机会。 Scotts Miracle-Gro股票最近的价格下跌是在8月4日,也就是该公司发布最新收益报告的当天。 报告显示,在截至7月3日的2021财年第三季度,该公司实现销售额16亿美元,同比增长8%。(来源:“ScottsMiracle-Gro公布创纪录的第三季度财务业绩;重申2021财年的销售和收益指导,”斯科特奇迹-格罗公司,2021年8月4日。) 美国消费者部门的销售额从10.9亿美元下降到10.5亿美元,下降了4%。然而,霍桑分部的销售额从2.857亿美元飙升至4.219亿美元。那是48%的增长! 简而言之,虽然斯科特奇迹-格罗公司最大的部门在报告季度显示销售额下降,但其大麻驱动业务的增长远远抵消了这一下降。 该公司还宣布了一项新的收购:霍桑将以6500万美元收购水文净化系统。HydroLogic是大麻行业水过滤和净化产品、配件和系统的领先供应商。 这笔交易将扩大霍桑的水过滤和净化产品的品牌组合,预计将为公司增加约2000万美元的年销售额。 Scotts Miracle-Gro公司的管理层已经明确认为大麻是该公司的下一个大机会。 在最新的收益电话会议上,该公司首席执行官詹姆斯·哈格多恩(James S.Hagedorn)表示,“我们不断发展的愿景是,在联邦法律允许的情况下,创造可选性,在更广泛的美国大麻市场上拥有先行者优势。”(来源:《2021年FQ3收益电话会议记录》,斯科茨奇迹-格罗公司,2021年8月4日。) 他继续说,“毫无疑问,这个行业将迎来大幅增长。鉴于我们的记录,我相信我们绝对有权在这里获胜。“ 2021财年全年,管理层保持了全公司销售增长17%至19%的指导。具体来说,美国消费者市场预计将增长7%至9%,而霍桑的销售额预计将增长40%至45%。 在Scotts Miracle-Gro公司发布最新收益报告的当天,SMG的股票暴跌6.7%。但是,正如刚才提到的,实际结果--和指导--一点也不差。考虑到大麻行业的前景,霍桑继续推动斯科特奇迹-格罗的增长应该没有问题。 一句话:很难说市场情绪何时会转向看涨斯科特奇迹-格罗股票。但就目前而言,该公司的情况可能对希望在大麻行业获得一些敞口的逆势投资者来说是一个很好的机会。

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