Scotts Miracle-Gro stocks rise thanks to cannabis

The cannabis industry continues to grow, and it also continues to affect neighboring industries as well. Scotts Miracle-Gro for instance experienced a record high for its stock (SMG), which reached 2.7 percent on August 4 and hit $80.14. As a result, J.P. Morgan switched the stock status from Neutral to Overweight, altering its target price to $85 from $70.

While it can’t be entirely assumed that cannabis is the only reason that Scotts Miracle-Gro stock prices rose so rapidly, the company’s steady increase throughout the year to point towards cannabis, according to numerous analysts. In 2016 so far, SMG has climbed 23 percent.

One analyst, Jeffrey J. Zekauskas, who was quoted in Barron’s, stated that the company plans to build a new business geared for the hydroponics market, “The hydroponics market taps into marijuana demand, and the company now has a growth option that we think an investor is able to capture for about the price of the traditional business.” Scotts Miracle-Gro recently purchased a Dutch based lighting and hardware company, as well as a plant nutrients and hydroponics company in Arizona.

The CEO of Scotts Miracle-Gro, Jim Hagedorn, is well-known for being vocal about the growing cannabis industry and how his company can work with cannabis as it becomes more widely accepted. The cannabis grow industry as it stands now is a tight-knit community, Hagedorn recently addressed the presence of Scotts Miracle-Gro during an earnings call on August 3.

“So, to our new friends in the hydroponics space, I want you to know that we take seriously our responsibility as the industry leader. And since we are an outsider, I know a lot of people will be watching to see how we behave,” Hagedorn stated. “We’ve done more than just assemble a portfolio of the best brands within the various industry categories. Along the way, we have also assembled a great array of talent, entrepreneurs who’ve built strong companies from the ground floor. The goal was not simply to buy their businesses. The goal, in fact, the obligation is to make them better. Whether it’s through innovation, new products, improved technical support, improved packaging, or registered control products, our job is to be great stewards of these brands and partners with this industry.”

Scotts Miracle-Gro is one of many large companies looking to get into the lucrative cannabis industry.