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GrowGeneration Corporation (GRWG) - Oppenheimer: These 2 “Strong Buy” Stocks Are Poised to Surge by Over 80%


July 17, 2020


https://finance.yahoo.com/news/oppenheimer-2-stocks-poised-surge-135427733.html


GrowGeneration Corporation (GRWG)

Taking its place as the largest hydroponic equipment supplier in the U.S., GrowGeneration owns and operates specialty retail hydroponic and organic garden centers. Given its strong long-term growth narrative and its $6.95 share price, it’s no wonder GRWG recently earned a thumbs up from Oppenheimer.

Covering the stock for the firm, 5-star analyst Brian Nagel likes what he’s seeing, to put it lightly. “GRWG represents a leading, yet still early stage, up-and-coming retail chain within the rapidly expanding and dynamic market for hydroponic and organic gardening supplies,” he noted.

Speaking to its footprint, the company operates 27 stores in ten states. That said, over the next few years, Nagel estimates that new store additions, including acquisitions and greenfield expansions, could approach more than 20 units per year, putting its total number of locations at over 90 stores by 2023.

To help it reach its targets, the company is putting advanced infrastructure in place. As part of these efforts, GRWG implemented a new ERP system, and in June, the stores were connected to its website, allowing for BOPUS and other functionality.

Expounding on this, Nagel stated, “Key to our initial positive outlook for GRWG is our view that the GRWG business model is now approaching a point of increased sustained underlying scalability... Our initial analysis suggests that, as GRWG accelerates further acquisition and organic expansion efforts, the company should increasingly capitalize upon scale-related synergies and over time deliver even better profit and cash generation.”

Additionally, after an all-primary, secondary equity offering, GRWG’s cash position lands at over $52 million, with only $314,000 in short- and long-term debt. Based on this, Nagel thinks that the company should be able to fund its near- and longer-term expansion objectives.

With the analyst projecting that through 2023, adjusted EBITDA will reach roughly $55 million on total company revenue of more than $400 million, Nagel doesn’t believe GRWG’s full value has been built into the share price.

To this end, Nagel rates GRWG a Buy along with a $15 price target. This target indicates shares could skyrocket 110% in the next year. (To watch Nagel’s track record, click here)

Turning now to the rest of the Street, other analysts are on the same page. Only Buy ratings, 5, to be exact, have been issued in the last three months, so the consensus rating is a Strong Buy. The $10.20 average price target puts the potential twelve-month gain at 42%. (See GrowGeneration stock analysis on TipRanks)

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