These days a lot of attention has turned to companies involved in the growth and distribution of marijuana. Since a number of states in the U.S. have approved the sale of marijuana, the market has seen a number of companies become publicly available. Most of the companies are not listed on a major exchange and trade as penny stocks or below $5. These companies carry a higher than normal amount of risk given their limited trading volume. Big orders placed either to buy or sell can cause major swings in price.
If you’re stuck in a position where you want to have exposure to the marijuana industry, yet do not want to shoulder the perceived risk, you need to find companies indirectly related to the industry’s growth. One associated business that will benefit from an increase in marijuana production is Scott’s Miracle-Gro (SMG). The company has developed a subsidiary called Hawthorne Gardening that is targeting the hydroponics horticulture method. For those not familiar, hydroponics is a process of growing plants in sand, gravel or liquid, with added nutrients. This is a very popular way in which to cultivate and grow marijuana plants.
With Scotts you have a company with a core business model that is straight forward and steady. The core business creates an opportunity in that it allows Scotts to focus its capital to develop a sub-business that specifically targets an area that is rapidly growing. This demonstrates that Scott’s leadership has enough sense to understand a good opportunity when it comes along.
If you’re looking for a way to gain exposure to the marijuana industry and don’t have a desire to shoulder the risk that comes along with investing in marijuana stocks, take a look at Scotts. The company has positioned itself to benefit from the boom.