GrowGeneration (GRWG) is a chain of hydroponics stores that mainly serve the cannabis industry. GRWG reported strong growth in 2019 that has managed to continue into 2020, which has led shares to deliver multi-bagger returns this year alone. Can the outperformance continue? In this report, I give my verdict on the valuation and my forecast for improving profitability or lack thereof. I remain skeptical that comparable sales growth can continue beyond the pandemic, at least to the point that would justify the current valuation.
The Home Depot Of Weed
GRWG is the largest chain of hydroponics stores in the USA, with 28 stores spread over 10 states. Most of its stores are located in states which have fully legalized cannabis:
(Investor Presentation)
GRWG can be considered a “picks and shovels” type company for the cannabis industry, as it sells supplies ranging from nutrients & additives to lighting:
(Investor Presentation)
GRWG has delivered stellar top-line growth in the…
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