Scott's Miracle Grow is primed to make huge gains over the next several years. Morningstar gave a fair price review of $66 for this stock and targets $110, it is currently trading around $68
Why should you buy SMG? Well it's got a ton of name recognition, a history of success, and there are emerging markets which SMG should be able to capture like cannabis (14% expected growth by 2030) or AgTech sectors like vertical farming (CAGR 10.30% by 2028)).
The housing market could also be a factor for gains off regular people who use fertilizer, gardening products, etc. In 2022, first-time home buyers was at an all time low which means there is a motivator for banks to unload their fucking real estate they snatched up from the American people. Home gardening is expected to grow to 120.5 billion THIS YEAR, with a 2.5% expected growth rate by 2026.
SMG revenue.
Morningstar Jul 11 2023:
Our fair value estimate is $110 per share. We apply an 7.8% weighted average cost of capital. Our
valuation assumes U.S. consumer segment sales return to growth in fiscal 2023 as the gardening
market rebounds from 2022 lows. We expect the segment to benefit from normalized volumes along
with pricing benefits, as Scotts hiked prices multiple times throughout 2022. We forecast near term
margin compression due to rising input costs as it will take Scotts some time to fully pass along cost
inflation.
Our long-term outlook is driven by our U.S. housing forecast of a little less than 1.5 million housing
starts per year, on average, through 2030. While our outlook for U.S. housing should increase demand
for Scotts’ products, several emerging trends partially offset our outlook. Consumers in areas affected
by water supply constraints, such as Texas and California, contribute 75% of revenue to Scotts MiracleGro.
I'm currently investin daily and I have stocks I bought around the $66 strike price. Eager to see what happens!
Thoughts?
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