Investors looking for a play in the burgeoning legal U.S. marijuana industry are turning to a company known mainly for its lawn-care products.
After making big bets on pot, Scotts Miracle-Gro Co. has seen its shares soar 31 percent to a record this year as polls indicate California, Massachusetts, Maine, Nevada and Arizona are poised to approve referendums dramatically expanding legal U.S. cannabis use. California alone could triple the nation’s $6 billion legal marijuana industry if voters there approve recreational use next month, according to a Sept. 12 report from Cowen & Co.
“It is being looked at as a marijuana growth story,” said Ivan Feinseth, a New York-based analyst with Tigress Financial Partners LLC, a banking and brokerage firm that rates the shares “buy.”
Scotts has been on a buying frenzy over the past 18 months, gobbling up leading companies that provide specialty fertilizers, lighting and other supplies for hydroponics, the indoor method of growing crops favored by U.S. cannabis cultivators. The company’s hydroponics business now generates about $250 million of revenue a year. While the products are sold mostly through specialty shops, Scotts’ Black Magic brand for indoor growing is available in 165 Home Depot stores.
