In the past three months, cannabis stocks have swooned in general. The AdvisorShares Pure Cannabis ETF is down more than 6% in that time, and plenty of individual cannabis companies have…
lost a lot more.
Among those are Columbia Care (OTC:CCHWF), Hydrofarm Holdings (NASDAQ:HYFM), and Scotts Miracle-Gro (NYSE:SMG), all of which are down 18% or more in the past three months despite what I see as positive financial trends that make them bargain stocks at the moment.
Columbia Care is an overlooked MSO
Columbia Care’s shares are down more than 26% in the past three months. The company is one of the larger multi-state operators around; it has 96 dispensaries (both operating and in development) and licenses in 18 U.S. jurisdictions and the EU. It also has 31 cultivation and manufacturing facilities, all in the U.S., including five in Colorado.
The company is in the process of buying Denver-based Medicine Man Technologies, and the addition of that company’s four retail outlets will make Columbia Care the largest cannabis operator in Colorado — the state with the second highest U.S. total marijuana sales — with 26 stores.
In its second-quarter report released last week, Columbia Care reported revenue of $109.7 million, up 232% year over year and 19% sequentially. It also saw record adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) of $16.4 million, an improvement of $21.1 million over the same period in 2020 and 58% sequentially.
The states in which Columbia Care is seeing the most revenue are California, Colorado, Massachusetts, Ohio, and Pennsylvania, though it also experienced a revenue jump of 48% in Florida, sequentially, thanks to increased flower production and new product launches.
Hawthorne leads the way for Scotts Miracle-Gro
Scotts Miracle-Gro’s shares are down more than 31% over the past three months, even though it is coming off a strong third quarter.
Through its subsidiary, the Hawthorne Gardening Company, the company is a leading provider of lighting, supplements, nutrients, hydroponic equipment, and everything else needed to grow marijuana.
Hawthorne’s growth has helped drive the company’s overall revenue. In the third quarter, Scotts’ sales were up a reported 8% year over year, led by Hawthorne’s rise of 48%. The company also purchased HydroLogic Purification Systems — which makes products, accessories, and systems for water filtration and purification — for $65 million. It will be part of the Hawthorne segment and is expected to add $20 million in annual sales, the company said.
Through nine months, Scotts’ sales were $4.91 billion, up 29% year over year, with net income of $560.4 million, up 46% over the same period in 2020.
Really, the main concern at this point is that the rest of the company isn’t keeping up with Hawthorne’s growth. But that’s to be expected, given the ever-increasing need for…
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