memoriesarecaptured/iStock Editorial via Getty Images
- The Scotts Miracle-Gro (SMG +9.3%) is trading high in mid-day trading after Wells Fargo analyst Chris Carey initiated coverage with an Overweight rating, with a $180 price target.
- He launched coverage of three hydroponics operators in the cannabis industry, which he said has "gone from taboo to mainstream, both on Wall St. and on Main St."
- Hydroponics is "really a market share game," added the analyst.
- The federal illegality of cannabis limits investments for those needing to stay in the bounds of federally legal operators, but there are still opportunities, such as in "tangential sectors" such as hydroponics, Carey said.
- In August, the company formed a new subsidiary to make minority investments in areas of the cannabis industry not currently pursued by its Hawthorne Gardening unit.
- Scotts is the largest supplier of hydroponics equipment and supplies in North America via its Hawthorne division, which is complemented by a large, stable consumer lawn and garden business, noted Carey.
- Recently, for boosting Hawthorne Gardening the company agreed to acquire Rhizoflora's nutrients business, including its Terpinator and Purpinator brands.
- SA Contributor Michael Wiggins De Oliveira recently wrote, the cannabis angle is already fully priced in Scotts Miracle-Gro.