Core Insights - The U.S. cannabis industry is experiencing renewed momentum, with ancillary stocks gaining investor interest due to potential federal reforms and market expansion [1][3][14] - The legal cannabis market generated over $30 billion in sales last year and is projected to exceed $50 billion by 2030, highlighting significant growth potential [1] Ancillary Companies Overview - Ancillary companies provide essential tools, marketplaces, and supplies for the cannabis industry, facing fewer regulatory hurdles compared to traditional operators [1][3] - Key ancillary stocks to watch include Leafly Holdings (LFLY), WM Technology (MAPS), and GrowGeneration (GRWG), each serving different roles within the cannabis ecosystem [3][6][13] Leafly Holdings (LFLY) - Leafly is a prominent cannabis discovery and marketplace platform, connecting consumers with over 4,600 dispensaries and delivery services across legalized states [4][5] - The company is working towards profitability, with annual revenue in the mid-thirty-million-dollar range and high gross margins approaching 90% [5] - Leafly faces challenges with consistent net losses and must improve revenue per dispensary while managing cash flow [7][14] WM Technology / Weedmaps (MAPS) - WM Technology operates the Weedmaps platform, connecting over 5,200 dispensaries with consumers and providing software solutions for operational efficiency [7][9] - The company has shown signs of stabilization, with quarterly revenue around the mid-forty-million-dollar mark and a recent small net profit indicating a shift towards sustainable growth [9] - Investors should monitor WM Technology's ability to increase upselling of software tools to enhance profitability [9][14] GrowGeneration (GRWG) - GrowGeneration is a leading hydroponics and cultivation supply retailer, operating over 20 retail and distribution centers nationwide [10][12] - The company has annual revenue exceeding $160 million but faces ongoing net losses due to high operating expenses [12] - GrowGeneration is expanding into international markets, which could create new revenue streams but also requires careful expense management [12][14] Investment Considerations - As the cannabis industry matures, monitoring revenue trends, margin improvements, and balance sheet strength will be crucial for investors [14] - The ongoing discussions around federal reform and state market expansions present opportunities for ancillary players to capture growth if they execute effectively [14]

Industry Overview - The Zacks Agriculture - Products industry is currently facing challenges due to lower commodity prices, high input costs, and labor shortages, but increasing consumer awareness regarding food ingredients and a preference for healthier alternatives are expected to support the industry [1][4] - The industry includes companies involved in storing agricultural commodities, distributing ingredients, and farming crops, livestock, and poultry products [3] Current Trends - Agricultural commodity prices are under pressure from ample supply, while rising labor, packaging, and distribution costs are impacting profitability [4] - The global population is projected to grow to 8.6 billion by 2030 and 9.8 billion by 2050, leading to a 50% increase in global food demand, which will drive industry growth [5] - Hydroponics and vertical farming are emerging as key agricultural technologies, providing benefits such as faster crop growth and higher yields [6] Market Performance - The Zacks Agriculture - Products industry has underperformed compared to the Basic Materials sector and the S&P 500 over the past 12 months, with a decline of 9.4% compared to a 2.6% rise in the sector and an 18.4% gain in the S&P 500 [10] - The industry is currently trading at a trailing 12-month EV/EBITDA ratio of 6.83X, significantly lower than the S&P 500's 18.50X and the Basic Materials sector's 14.16X [11] Company Highlights - GrowGeneration has shown improvements in gross margin and adjusted EBITDA, focusing on a leaner, product-driven organization, with proprietary brand sales growing to nearly 32% of total revenues [16] - GrowGeneration's recent acquisition of Viagrow is expected to enhance its retail presence and support its goal of maintaining 30%+ gross margins [16] - Andersons has acquired full ownership of TAMH, which operates four ethanol plants, and is expected to be immediately accretive to earnings per share [22]

Industry Overview - The U.S. cannabis industry is projected to exceed 40 billion dollars in annual sales by 2025, driven by increasing state approvals for medical and recreational use and discussions on federal legalization [1][11] - Ancillary companies, which provide essential tools to cultivators and dispensaries without directly handling cannabis, are positioned favorably due to lower regulatory risks [1] Company Summaries GrowGeneration (GRWG) - GrowGeneration operates a significant hydroponic and organic gardening supply chain in the U.S., with a strong presence in California and operations in Colorado, Oregon, and Florida [3] - In Q2 2025, GrowGeneration reported net sales of approximately 41 million dollars, showing sequential improvement but a decline from the previous year [3] - Proprietary brands contributed over 30% to cultivation and gardening revenue, with gross profit margins exceeding 28% [3] - The company ended the quarter with nearly 50 million dollars in cash and marketable securities and has no debt, indicating a strong financial position [3] Hydrofarm Holdings Group (HYFM) - Hydrofarm is a leading distributor and manufacturer of hydroponic equipment, focusing on commercial cannabis cultivators in the U.S. and Canada [5] - For the full year 2024, Hydrofarm reported revenue of just over 190 million dollars, a decline of more than 15% year-over-year, with net income negative by over 66 million dollars [7] - The company is working on reducing excess inventory and streamlining operations to control costs, with a focus on improving gross margins [7] Scotts Miracle-Gro (SMG) - Scotts Miracle-Gro is a well-known name in consumer gardening, with its Hawthorne Gardening division supplying hydroponic equipment to cannabis cultivators [8] - In Q3 2025, Scotts reported total revenue of about 1.19 billion dollars, with Hawthorne Gardening's revenue declining by over 50% to around 33 million dollars [10] - Despite the decline in the Hawthorne division, net income rose to nearly 150 million dollars, supported by strength in the broader consumer business [10] Investment Insights - The three companies exemplify the diversity within the ancillary cannabis sector, with GrowGeneration focusing on brand value and retail scale, Hydrofarm addressing revenue challenges through cost discipline, and Scotts leveraging its consumer business stability [11] - As the cannabis industry continues to grow, these ancillary providers are essential to cultivation and supply chains, presenting unique advantages and risks for investors [11]

Core Insights - GrowGeneration Corp. (NASDAQ:GRWG) is recognized as one of the 12 best marijuana stocks to buy according to analysts, highlighting its strong market position in the hydroponic and organic gardening sector [1] - The company has formed a strategic distribution partnership with Arett Sales to enhance its wholesale presence across the United States, leveraging Arett's extensive network [1][2] - This collaboration will significantly expand GrowGeneration's retail footprint and market access through Arett's 650,000 square feet of warehouse space located in Connecticut, Ohio, and California, facilitating improved delivery and service [1][2] Group 1 - The partnership is described as a "major milestone" for GrowGeneration's wholesale growth, aiming to place its sustainable products in thousands of new stores nationwide [2] - Arett Sales' president emphasized the market potential for GrowGeneration's environmentally friendly products and the opportunity for growth across North America [2] - The agreement aligns with GrowGeneration's strategy to enhance its wholesale and national account capabilities, increase retail channel access, and promote margin-accretive growth [2]

Group 1 - The article discusses the investment potential in GrowGeneration, suggesting a modest initial position may be justified without the need to sell call options [1] - The author has a long-term investment strategy that includes selling covered calls and call roll forwards, indicating a preference for generating income while holding positions [1] - The author has a background in accounting and finance, with experience as a CFO and government auditor, which adds credibility to the analysis presented [1] Group 2 - The author holds a beneficial long position in GrowGeneration shares, indicating confidence in the company's future performance [2] - The article is presented as an independent opinion, with no compensation received from any company mentioned, ensuring an unbiased perspective [2] - Seeking Alpha emphasizes that past performance does not guarantee future results, highlighting the importance of individual investor discretion [3]

Industry Overview - Investors in marijuana stocks are anticipating news regarding cannabis rescheduling, which historically leads to an increase in stock prices for cannabis companies [1][2] - The cannabis sector has faced challenges but is now showing signs of growth and potential legalization, which could significantly impact stock performance [2][3] Company Highlights - **GrowGeneration Corp.** operates retail stores focused on hydroponic and organic gardening products in the U.S. and has announced participation in the H.C. Wainwright 27th Annual Global Investment Conference [4][6] - **Hydrofarm Holdings Group, Inc.** manufactures and distributes hydroponics equipment in the U.S. and Canada, with its latest financial update released in August 2023 [7][8] - **The Scotts Miracle-Gro Company** engages in the manufacture and sale of gardening products and has recently published its 2025 Corporate Responsibility report, outlining its sustainability goals [10][12] Financial Performance - The Scotts Miracle-Gro Company reported a decrease in net sales to $39.2 million from $54.8 million, with a gross profit margin decline to 7.1% from 19.8% [13] - Adjusted gross profit margin also decreased to 19.2% from 24.4%, while net loss improved to $16.9 million from $23.5 million [13] - The company initiated a restructuring plan aimed at reducing costs and improving operational efficiency [13]

Core Insights - GrowGeneration Corp. is the largest specialty hydroponic and organic gardening retailer in the United States [3] - CEO Darren Lampert will present at the H.C. Wainwright 27th Annual Global Investment Conference from September 8-10, 2025 [1] - The presentation is available on demand in the Investor Relations section of the GrowGen website [2] Company Overview - GrowGeneration offers a wide range of products including nutrients, additives, growing media, lighting, and environmental control systems [3] - The company features proprietary brands such as Charcoir, Drip Hydro, Power Si, Ion lights, The Harvest Company, and Viagrow [3] - GrowGeneration operates an online superstore and a wholesale business for resellers, along with a benching, racking, and storage solutions business called Mobile Media or MMI [3]

Core Insights - GrowGeneration Corp. has announced a strategic partnership with Arett Sales to expand its distribution network for organic fertilizers and sustainable growing media across the U.S. [1][2] - The collaboration will enhance GrowGeneration's wholesale and B2B strategy, allowing its proprietary brands to reach thousands of new retail locations [1][3] Company Overview - GrowGeneration is the largest specialty hydroponic and organic gardening retailer in the U.S., offering a wide range of products including nutrients, additives, and proprietary brands [4] - The company operates an online superstore and a wholesale business for resellers, as well as a storage solutions business [4] Partnership Details - Arett Sales will distribute GrowGeneration's proprietary product lines through its extensive network serving independent garden centers, hardware stores, and nurseries across 32 states [2][3] - The partnership includes support through merchandising, marketing campaigns, and trade shows, aimed at enhancing retail access and driving growth [3] Market Impact - This partnership is expected to significantly increase GrowGeneration's retail footprint in the lawn and garden sector, providing innovative and sustainable solutions to a broader market [3] - Arett Sales, with over 650,000 square feet of warehousing, will facilitate daily deliveries and store-level service, enhancing distribution efficiency [2][6]

Core Viewpoint - Momentum investing focuses on "buying high and selling higher," rather than traditional strategies of buying low and waiting for recovery [1][2] Group 1: Momentum Investing Strategy - Momentum investors often face challenges in determining the right entry point, as stocks can lose momentum when their valuations exceed future growth potential [2] - Investing in bargain stocks that exhibit recent price momentum can be a safer strategy, utilizing tools like the Zacks Momentum Style Score to identify promising stocks [3] Group 2: GrowGeneration (GRWG) Analysis - GrowGeneration (GRWG) has shown significant price momentum, with a four-week price change of 45%, indicating strong investor interest [4] - Over the past 12 weeks, GRWG's stock has gained 33%, and it has a high beta of 3.29, suggesting it moves 229% more than the market [5] - GRWG has a Momentum Score of A, indicating a favorable time to invest based on its momentum characteristics [6] Group 3: Earnings Estimates and Valuation - An upward trend in earnings estimate revisions has contributed to GRWG earning a Zacks Rank 2 (Buy), which is associated with strong momentum effects [7] - GRWG is currently trading at a Price-to-Sales ratio of 0.53, suggesting it is undervalued, as investors pay only 53 cents for each dollar of sales [7] Group 4: Additional Investment Opportunities - Besides GRWG, there are other stocks that meet the criteria of the 'Fast-Paced Momentum at a Bargain' screen, presenting additional investment opportunities [8] - The Zacks Premium Screens offer over 45 different strategies tailored to help investors find winning stock picks [9]

Industry Overview - The U.S. cannabis industry is projected to generate over $30 billion in annual sales in 2024, with expectations to exceed $50 billion by 2030 due to expanding legalization and rising consumer demand [1] - Recent bipartisan discussions in Congress aim to improve banking access for cannabis businesses, potentially boosting profitability [1] - Ancillary cannabis companies, which provide products and services to cultivators and retailers, benefit from sector growth while avoiding direct plant-touching risks [1][3] Company Highlights - **GrowGeneration (GRWG)**: Operates the largest chain of hydroponic and organic gardening stores in the U.S., reporting net sales of $41 million in Q2 2025, a 14.7% increase from the prior quarter, despite a year-over-year revenue decline [5][8] - **Hydrofarm Holdings Group (HYFM)**: Manufactures and distributes hydroponics equipment, with 2024 revenue of $190.29 million, down 16% from 2023. The company is set to release Q2 2025 results, with a focus on stabilizing revenue [9] - **Scotts Miracle-Gro (SMG)**: Generated approximately $3.55 billion in total revenue in 2024, with a significant improvement in net loss to $34.9 million. The Hawthorne division faced a 35% decline in sales, but the company plans to divest this unit to reduce volatility [10][13] Investment Considerations - Ancillary cannabis stocks like GrowGeneration, Hydrofarm, and Scotts Miracle-Gro provide exposure to the cannabis market while avoiding the complexities of direct sales [14] - GrowGeneration is noted for improving margins and effective cost management, while Hydrofarm is viewed as a watch-and-see opportunity pending upcoming earnings [15] - Scotts Miracle-Gro's planned divestiture of the Hawthorne unit may reshape its market exposure, focusing on core operations for more predictable growth [15]