GrowGeneration Corp (NASDAQ:GRWG) is one of the marijuana stocks leading the sector’s recovery from the recent big selloff that saw many marijuana stocks fall to their 2-year lows. GrowGeneration has strongly bounced back, delivering beautiful returns for investors. The stock has risen almost 40% from its recent low of $3.40 in October. It is up nearly 90% from its 2019 all-time low.
Still, GrowGeneration has more room to rally. The stock currently trades about 30% below its peak. As you are about to see below, there are more catalysts to propel the stock to greater highs. You may want to reserve a seat for this flight.
GrowGeneration is a specialty retailer focused on selling hydroponic and organic gardening equipment and related supplies. Its target customers are commercial and home growers, including marijuana cultivators. GrowGeneration currently operates 25 specialty stores across several states including California and Colorado. Its goal is to eventually operate 1,000 stores across the US.
Why GrowGeneration upgrading its stock listing to Nasdaq is a big deal
GrowGeneration announced on Monday that it has secured the approval allowing it to upgrade the listing of its stock from OTC Markets currently to the Nasdaq Capital Market (NASDAQ). GrowGeneration shares will commence trading on NASDAQ on December 2.
Upgrading the stock listing to NASDAQ will bring many benefits to GrowGeneration and its shareholders. Firstly, listing on NASDAQ will increase investor awareness of the stock, which could in turn draw more investors to the stock and lift the price. Secondly, listing on NASDAQ will boost liquidity of the stock. Finally, listing on NASDAQ promises to boost the stock’s appeal to institutional investors, which could in turn drive up big demand for the stock and drive the price to greater highs.
NASDAQ:GRWG continues robust growth and maintains profits
GrowGeneration released its third quarter financial results on November 11. The company reported solid numbers across the top and bottom lines. Revenue increased 159% year-over-year and came at $21.8 million. Net profit topped $1.0 million, marking a sharp reversal of fortunes from a loss of $0.8 million in the year-ago quarter. The robust revenue growth and profit go show how GrowGeneration’s management has gotten better at balancing investments and cost control.
The strong third quarter results prompted GrowGeneration to lift its 2019 revenue guidance for the third time. The company now expects its 2019 full-year revenue to come in the band of $74 million – $76 million. GrowGeneration originally forecast 2019 full-year revenue in the range of $52 million – $58 million. But it bumped up the guidance to a range of $60 million – $65 million after reporting first quarter results. It again lifted the full-year revenue target to a range of $65 million – $70 million after reporting second quarter results.
GrowGeneration finished the third quarter with $30.4 million of working capital and $16 million in cash reserve, which provides adequate financial flexibility for the management to continue investing in growth. GrowGeneration has been opening more stores to improve its customer accessibility and drive sales in turn.
“We continue to invest in technology and infrastructure, while improving the financial performance of the Company in all areas,” commented Darren Lampert, CEO of GrowGeneration.
Signs point to a bright future for NASDAQ:GRWG
GrowGeneration has great growth potential. Currently, the has only established footprint in a handful of US states where marijuana is legal. That goes on to show the company still has plenty of room to grow in the existing marijuana market in the US. Moreover, even in the states where GrowGeneration has entered, there is still more room to grow. For example, GrowGeneration currently operates only five stores in California, the largest marijuana market in the US. It has also only opened five stores in Colorado, another big US marijuana market.
GrowGeneration’s growth potential looks even greater considering the ongoing efforts to legalize marijuana under the federal level in the US. The House lawmakers recently passed a bill that seeks to make marijuana legal under federal laws. Previously, the House passed a bill that seeks to allow federally regulated banks to do business with marijuana companies in states where pot is legal. Senate lawmakers also have their own programs to legalize marijuana.
The US marijuana market generated $10.5 billion in sales last year, according to ArcView Market Research and BDS Analytics estimates. That represents business is the 33 states where marijuana is legal. US marijuana sales are projected to reach $13.1 billion this year and rise to $22.2 billion in 2022. Federal legalization of marijuana would see the US marijuana market grow even faster, and GrowGeneration stands to benefit from such growth.
In addition to the US, GrowGeneration plans to enter Canada’s marijuana market as well. Canada last year became the first developed nation to fully legalize marijuana. Canada’s marijuana sales were $1.2 billion in 2018 and are expected to jump to $5.9 billion by 2022.
The ongoing marijuana legalization efforts around the world means that marijuana companies generally face a bright future because of the widening market opportunity. Even so, marijuana companies with solid financials and strong management are hard to come by. That is why NASDAQ:GRWG is a rare breed in the marijuana stocks universe.
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Disclosure: We have no position in NASDAQ:GRWG and have not been compensated for this article.
Forget APHA and ACB, Buy GTBIF and TCNNF
There are a lot of misconceptions going on when it comes to US legalization. Many investors are buying Aphria (APHA) and Aurora Cannabis (ACB) hoping to bank on what’s happening in the US. However, they are Canadian Licensed Producers and have no business in the US. Investors are buying them because they trade on the major exchanges, but that is the wrong move. The correct move is to buy the US multi-state operators like Green Thumb Industries (GTBIF) and Trulieve Cannabis (TCNNF).
On Election Day voters in New Jersey, Arizona, Montana and South Dakota voted to legalize recreational marijuana. South Dakota and Mississippi voters also approved measures to legalize medical marijuana.
There’s also the prospect of a more pot-friendly White House with President-elect Joe Biden. Vice Presidential Candidate Kamala Harris said at the debate a Biden administration would decriminalize marijuana at a federal level and expunge criminal records of people with marijuana-related offenses.
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The company also owns and operates rapidly growing national retail cannabis stores called Rise™ and Essence. Headquartered in Chicago, Illinois, Green Thumb has 13 manufacturing facilities, licenses for 96…
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OTCMKTS:DECN Price Analysis
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