Contrarian Value Ideas

[gfp927z]

Derf, Just curious if you are still long Scotts Miracle-Gro? I remember you mentioned it back in late Feb, and chart-wise it looks like the bottom is likely in. I had some a few years back in 2020 when it was zooming, but just recently got back in with a small position as a turnaround.

While SMG has the big cannabis angle to it via its Hawthorne unit, it also has the original lawn care business, so has some diversity. While net income is still negative (per Yahoo Finance), and the debt level is on the high side (2.8 bil) compared to the current 4 bil market cap, the cash flow is positive by over 1 bil, and the PEG is only 0.4. The short position is still high, 13.6% of the float, but revenues were 3.5 bil, up 8%. But this data is from Yahoo Finance, so it might be slightly dated.

Anyway, the chart is what got me re-interested in the stock. It formed a quasi- ascending triangle over the last 2 years, and has put in a series of higher lows. So I figure it might finally be time for a long position as a turnaround, though could take patience due to the cannabis connection. The relatively high debt / mkt cap ratio will improve quickly once the stock moves higher.

In the very near term it left a bearish candlestick today, so might need a near term pullback. But after that the upside target should be 76 and then 80, which is the key resistance area of the ascending triangle. Once through that the Wall Street traders should take notice, and the 13% short position could start covering. Should be interesting.




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