GrowGeneration(GRWG) long term gainer, easily 3xing in next 5 years

GrowGeneration Corp.(GRWG), through its subsidiaries, owns and operates retail hydroponic and organic gardening stores in the United States. It engages in the marketing and distribution of horticultural, organics, lighting, and hydroponics products, including lighting fixtures, nutrients, seeds, and growing media, systems, trays, fans, filters, humidifiers and dehumidifiers, timers, instruments, water pumps, irrigation supplies, and hand tools.  GRWG's YOY revenue(TTM) grew over 100%. Even considering the equity dilution their revenue grew 50%+. YOY. Net income(TTM) also grew by more than 100% compared to last year. On the contrary, the stock has lost more than half of its value since February. GRWG supplies a cannabis industry that is forecast to have a compound annual growth rate of 27% through 2028. Additionally, with massive growth in past quarters and most likely will continue for the foreseeable future, it appears the current sell-off could be an opportunity for growth-oriented investors.  One thing investors should keep in mind is that GrowGeneration is actually more of a retail stock than a cannabis play. It's true that this hydroponics supplier offers the supplies and equipment needed by marijuana growers. And it has created or bought private label marijuana products, selling over 10,000 items that continue to draw customers to its e-commerce site and stores. Such varied products make it distinct from the hydroponics supply aisles found in average Lowe's or Home Depot stores. Those larger retailers tend to act more as generalists who cannot offer the vast array of supplies and equipment available at GrowGeneration. And while approximately 2,400 hydroponics stores exist, according to IBISWorld, nearly all are small enterprises, leaving a market ripe for a larger, consolidated operation like GrowGeneration to emerge as the leader in the industry. Although its 60 stores may not sound like a large footprint, it stretches from the West Coast to Florida, and its store count has more than doubled since the second quarter of 2020. Moreover, management has announced a goal of operating 100 stores by 2023 and eventually expanding to all 50 states. GRWG is estimated to generate about 440 million USD in revenue by end of the fiscal year 2021. If we assume the GRWG on average grow revenue by about 30% for the next 5 years( this is a very conservative estimate considering its recent quarterly revenue growth) it will generate annual revenue of 1.634 Billion USD by 2026. Now, if we put the GRWG in the retail store category such as Home Depot it should be able to bring 10% of revenue in net profit in long term. That would be 163.4 million in net profit by 2026. The growth doesn't end here. I believe it will keep growing by at least 10% for the next decade. so it will be reasonable to slap a 20 P/E ratio on this earning. So, the whole company will value about 163.4 x 20= 3.268B USD. Right now Growgeneration is valued at about 1.1B USD. That is 3xing your investment in the next 5 years- on an average about 25% return per year on your investment. Not bad! Note- This is not financial advice. It is just my personal opinion so please do your own research before buying this stock. 

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GrowGeneration(GRWG) long term gainer, easily 3xing in next 5 years

Nov 25, 2021

bullish

fundamentals Analysis

[3 min Read]

GrowGeneration Corp.(GRWG), through its subsidiaries, owns and operates retail hydroponic and organic gardening stores in the United States. It engages in the marketing and distribution of horticultural, organics, lighting, and hydroponics products, including lighting fixtures, nutrients, seeds, and growing media, systems, trays, fans, filters, humidifiers and dehumidifiers, timers, instruments, water pumps, irrigation supplies, and hand tools.

GRWG's YOY revenue(TTM) grew over 100%. Even considering the equity dilution their revenue grew 50%+. YOY. Net income(TTM) also grew by more than 100% compared to last year. On the contrary, the stock has lost more than half of its value since February. GRWG supplies a cannabis industry that is forecast to have a compound annual growth rate of 27% through 2028. Additionally, with massive growth in past quarters and most likely will continue for the foreseeable future, it appears the current sell-off could be an opportunity for growth-oriented investors.

One thing investors should keep in mind is that GrowGeneration is actually more of a retail stock than a cannabis play. It's true that this hydroponics supplier offers the supplies and equipment needed by marijuana growers. And it has created or bought private label marijuana products, selling over 10,000 items that continue to draw customers to its e-commerce site and stores.

Such varied products make it distinct from the hydroponics supply aisles found in average Lowe's or Home Depot stores. Those larger retailers tend to act more as generalists who cannot offer the vast array of supplies and equipment available at GrowGeneration.

And while approximately 2,400 hydroponics stores exist, according to IBISWorld, nearly all are small enterprises, leaving a market ripe for a larger, consolidated operation like GrowGeneration to emerge as the leader in the industry.

Although its 60 stores may not sound like a large footprint, it stretches from the West Coast to Florida, and its store count has more than doubled since the second quarter of 2020. Moreover, management has announced a goal of operating 100 stores by 2023 and eventually expanding to all 50 states.

GRWG is estimated to generate about 440 million USD in revenue by end of the fiscal year 2021. If we assume the GRWG on average grow revenue by about 30% for the next 5 years( this is a very conservative estimate considering its recent quarterly revenue growth) it will generate annual revenue of 1.634 Billion USD by 2026. Now, if we put the GRWG in the retail store category such as Home Depot it should be able to bring 10% of revenue in net profit in long term. That would be 163.4 million in net profit by 2026. The growth doesn't end here. I believe it will keep growing by at least 10% for the next decade. so it will be reasonable to slap a 20 P/E ratio on this earning. So, the whole company will value about 163.4 x 20= 3.268B USD. Right now Growgeneration is valued at about 1.1B USD. That is 3xing your investment in the next 5 years- on an average about 25% return per year on your investment. Not bad!

Note- This is not financial advice. It is just my personal opinion so please do your own research before buying this stock.

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GRWG

GrowGeneration Corp.

3.64

-0.08
-2.15%

Return

-80.13%
Change % Since Posting
-14.68
Change Since Posting
18.32
Price When Posted

Metrics

54.00
Target Price
9/ 10
Confidence
3+ Years
Timeframe
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Earnings Per Share
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Financials
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Management
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Price to Earnings Ratio
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Dividend
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