Categories: world

Cronos Group vs. Scotts Miracle-Gro – The Motley Fool

Buy the big momentum or buy the big pullback? Cronos Group (NASDAQ: CRON) and Scotts Miracle-Gro (NYSE: SMG) . Shares of Cronos are up more than 45% so far in 2018, while Scotts stock has plunged around 40% year to date. Another question you might ask is whether to invest in a pure play marijuana stock (Cronos) or a top supplier to marijuana growers with extensive operations in addition to its cannabis focus (Scotts). Men den bedste måden at bestemme hvilke af disse to marijuanaaktier er det bedre valg er å se på deres fremtidsperspektiver. Here's how Cronos Group and Scotts Miracle-Gro compare. Image source: Getty Images. The case for Cronos Group Cronos Group's prospects should be very good over the long run. The Canadian Recreational Marijuana Market is just getting started. The country's total cannabis market should grow to around $ 5.5 billion by 2022, according to projections from Arcview Market Research and BDS Analytics. European opportunities for Cronos look even more promising. The company already has a supply deal in Germany, which is likely to be the fastest growing marijuana market in the world over the next four years. Cronos also has a supply agreement in Poland. And there are even more international growth drivers for Cronos Group. The marijuana producer has joint ventures in Australia, Israel, and Latin America. The key thing for investors to know about Cronos Group, though, is that it arguably ranks in the top two Canadian marijuana producers best-positioned to expand internationally. That's…

Buy the big momentum or buy the big pullback? Cronos Group (NASDAQ: CRON) and Scotts Miracle-Gro (NYSE: SMG) . Shares of Cronos are up more than 45% so far in 2018, while Scotts stock has plunged around 40% year to date.

Another question you might ask is whether to invest in a pure play marijuana stock (Cronos) or a top supplier to marijuana growers with extensive operations in addition to its cannabis focus (Scotts). Men den bedste måden at bestemme hvilke af disse to marijuanaaktier er det bedre valg er å se på deres fremtidsperspektiver. Here’s how Cronos Group and Scotts Miracle-Gro compare.

Image source: Getty Images.

The case for Cronos Group

Cronos Group’s prospects should be very good over the long run. The Canadian Recreational Marijuana Market is just getting started. The country’s total cannabis market should grow to around $ 5.5 billion by 2022, according to projections from Arcview Market Research and BDS Analytics.

European opportunities for Cronos look even more promising. The company already has a supply deal in Germany, which is likely to be the fastest growing marijuana market in the world over the next four years. Cronos also has a supply agreement in Poland.

And there are even more international growth drivers for Cronos Group. The marijuana producer has joint ventures in Australia, Israel, and Latin America.

The key thing for investors to know about Cronos Group, though, is that it arguably ranks in the top two Canadian marijuana producers best-positioned to expand internationally. That’s because Cronos recently announced the second largest investment from a major company outside of the cannabis industry. Earlier this month, tobacco giant Altria (NYSE: MO) picked Cronos Group as its cannabis partner, buying 45% of the company for around $ 1

.8 billion.

This deal gives Cronos Group a nice Hoeveelheid geld om te gebruiken in zijn wereldwijde voetspoor, iets dat het bedrijf CEO, Mike Gorenstein, zegt dat het eager is om te doen. Cronos also now has a big partner at its side with a lot of expertise in successfully launching products in highly regulated markets across the world.

There’s another opportunity for Cronos Group that could pay off in a big way if everything goes well. Cronos teamed up with Ginkgo Bioworks in an effort to produce high-purity cannabinoids from genetically engineered strains of yeast. Det er potential for at dramatisk nedbringe omkostningerne forbundet med nuværende metoder for fremstilling af cannabinoider ved ekstraktion fra cannabisplanter.

The case for Scotts Miracle-Gro

What about Scotts Miracle-Gro’s prospects? Back in the gold rush days, it was said that the biggest winners were not the miners, but were instead those who supplied picks and shovels to the gold miners. With the green rush of cannabis under way, Scotts definitely fits into the pick-and-shovel category.

A few years ago, Scotts Miracle-Gro made a calculated decision to become a big player in the U.S. cannabis industry. Its Hawthorne Gardening subsidiary went on a shopping spree with a string of acquisitions. Now, Hawthorne is the largest supplier of hydroponics solutions to U.S. marijuana growers. The company also supplies products including fertilizers, lighting systems, irrigation systems, and ventilation systems.

The largest market for Hawthorne right now is California. Selv om California’s rekreative marked blev klar til en rocky start i 2018, skulle størrelsen af ​​markedet være mere end dobbelt til $ 7,7 milliarder ved 2022. Men der er lige større muligheder for Scotts beyond California.

Thirty One U.S. states have legalized medical marijuana, with 10 now allowing the legalized use of recreational marijuana. Scotts is particularly excited about the latter group.

More large states, including Illinois, New Jersey and New York, could also legalize recreational marijuana in the not-too-distant future. These states combined could give Scotts new markets that together are roughly the size of the California market.

Of course, we must also look at the prospects for Scotts Miracle-Gro’s core lawn and garden products business. Admittedly, de vækstmuligheder i forbrukergræs og haveprodukter er ikke så spændende som i cannabisindustrien.

First, Scotts continues to launch new products that could boost sales for its core business. Second, the company benefits from longer, warmer seasons. Climate change could actually work in Scotts’ favor. Third, Scotts’ lawn and garden operations generate solid cash flow that the company uses to fund its dividend program. Scotts’ dividend currently yields almost 3.4%.

The better marijuana stock

I think that both Cronos Group and Scotts Miracle-Gro will be winners over the long term. But which is the better marijuana stock? It depends.

Conservative investors are probably better off picking Scotts Miracle-Gro. The company is profitable. Its dividend is attractive. Scotts provides a way to profit from the booming cannabis industry while offering more financial stability.

Aggressive investors, though, might like Cronos Group better. Thanks to the Altria deal, Cronos appears to be in a great position to capitalize on growth in the global cannabis market. There could be plenty of volatility, but I view Cronos Group more favorably than I have in the past.

And for what it’s worth, Cronos holds the distinction of being the best-performing marijuana stock of all time. That’s not a bad credential to have.

Share
Published by
Faela