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Scotts Miracle Gro: Picks And Shovels Play For Joe Biden Win, Marijuana Legislation

November 3, 2020 10:32 am
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Scotts Miracle Gro: Picks And Shovels Play For Joe Biden Win, Marijuana Legislation

Scotts Miracle Gro is best known for its market leading brands Scotts, Miracle-Gro and Ortho.

The company’s ownership of Hawthorne Gardening Company, a leader in indoor and hydroponic growing make the company an interesting play for the 2020 election.

The 2020 Election: Marijuana stocks moved higher Monday ahead of the election. The Scotts Miracle-Gro Company (NYSE:SMG) is a supplier to the industry that could benefit as the industry moves higher.

A win by former Vice President Joe Biden is expected to boost the marijuana market with a looser stance on criminalization for marijuana offenders.

The state of New Jersey also has an amendment to its constitution to legalize the buying and selling of recreational marijuana on its Nov. 3 election ballot. Politico reports Scotts Miracle-Gro contributed $800,000 in contributions to help the amendment pass in New Jersey.

Voters are also considering the legalization of marijuana for recreational use in Arizona, Montana and South Dakota.

Related Link: Scotts Miracle Gro Launches $50M VC Fund For Early-Stage Firms Investments

Hawthorne Gardening: This wholly owned subsidiary gets 90% of its sales from the United States and Canada. The two largest business segments are nutrients and lighting, representing around 50% of sales combined.

New markets launching is seen as one of the top growth items from the company.

Scotts Miracle-Gro originally estimated the Hawthorne segment to see full year revenue of $762 million for fiscal 2020.

“We also continued to see strong third quarter growth at Hawthorne in every product category and geography,” the company said on third quarter earnings.

Financials: Scotts Miracle-Gro will report fourth quarter earnings on Nov. 4. The election results could be decided by the time the company reports, meaning it could provide additional color on the results in its full year guidance for fiscal 2021.

The company has increased its guidance several times this year, which means the earnings report could be strong from Scotts Miracle-Gro.

In September, the company announced revised full year guidance of $7.25 in earnings per share and sales growth of 30% year-over-year.

Third quarter revenue was up 28% year-over-year for the company.

The Hawthorne segment saw sales increase 72% year-over-year in the third quarter to $302.9 million.

Nine month revenue for the Hawthorne segment is up 59% to $731.7 million, nearly surpassing the original full year forecast.

SMG Price Action: Shares of Scotts Miracle-Gro closed Monday up 4% to $155.37.

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