GrowGeneration Corp.
GRWG
recently announced the acquisition of Aquarius Hydroponics, an indoor-outdoor garden supply center specializing in hydroponics systems, lighting and nutrients. This is the company’s seventh acquisition this year and marks its foray into Massachusetts’ cannabis market.
Founded in 2013, Aquarius Hydroponics generates annual revenues approaching $5 million. This combination will aid GrowGeneration tap Massachusetts’ flourishing legal cannabis industry, which is projected to become a $1 billion industry in 2021.
This acquisition comes on the heels of the buyout of 55 Hydroponics, a hydroponic and organic fertilizer superstore located in Santa Ana, CA. With this buyout, GrowGeneration has 18 locations in California — the country’s largest legal cannabis market.
GrowGeneration also recently acquired Char Coir, which helped expand its private label offerings. Char Coir’s line of coco products is expected to add in excess of $15 million in revenues to GrowGeneration in 2021.
Earlier this month, the company announced that it has signed two new leases in Los Angeles County, CA, as the future sites of two new GrowGeneration Super Hydroponic Garden Centers. These leases represent 122,000 square feet of retail and distribution space.
GrowGeneration has been active on the acquisition front — making eight buyouts in 2020 and seven this year increasing its portfolio of hydroponic garden centers to 52 stores across 12 states. The company is close to its target of achieving 55 garden center locations by the end of 2021.
Hydroponics have been a staple in cannabis cultivation. As more and more states across the country continue to legalize cannabis, the company’s products are in demand. The company has been gaining from ongoing strength in sales on all fronts — online, commercial and retail. The company has rebranded its existing e-commerce operation, HeavyGarden.com and GrowGen.Pro, as growgeneration.com, which is an omni-channel sales approach to facilitate e-commerce across all its locations. It is more customer friendly and provides both options — delivery or pick-up from store. This initiative is expected to bolster sales.
In January, GrowGeneration pre-announced record full-year 2020 revenues and hiked revenue guidance for the current year. The company’s full-year 2020 revenues were $192 million compared with $80 million in 2019. The company raised 2021 revenue guidance to the range of $335 million to $350 million. It projects adjusted EBITDA between $38 million and $40 million.
Price Performance
Shares of the company have soared 239.1% in the past six months, compared with the
industry
’s rally of 113.8%.
Zacks Rank & Stocks to Consider
GrowGeneration currently carries a Zacks Rank #3 (Hold).
Some better-ranked stocks in the basic materials space include
Impala Platinum Holdings Limited
IMPUY
,
Fortescue Metals Group Limited
FSUGY
and
Nucor Corporation
NUE
. All of these stocks sport a Zacks Rank #1 (Strong Buy), at present. You can see
the complete list of today’s Zacks #1 Rank stocks here
.
Impala Platinum has an expected earnings growth rate of 198% for the current fiscal year. The company’s shares have soared 105% in the past six months.
Fortescue has a projected earnings growth rate of 84.3% for the current fiscal year. The company’s shares have surged 35% in the past six months.
Nucor has an estimated earnings growth rate of 42% for the current fiscal year. The company’s shares have appreciated 43% over the past six months.
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