After a decline in 2021, this growth stock is undervalued. Big money has been pouring into marijuana stocks as the industry gets ready for legalization across the US and Canada. The CEO of Aphria believes cannabis will be one of 3 billion dollar industries by 2028.

The “stocks with 10x potential” is a company that has seen a 76% decline in the market, but it still has the potential to grow. The company has a low valuation and could be an interesting investment opportunity.

After a 76% Decline in 2021, This Growth Stock Is Undervalued

Cannabis stocks in the United States have had a difficult year in 2021. The Advisor Shares U.S. Cannabis ETF (NASDAQ: MSOS) has lost 30% of its value this year and is down 52% from its 52-week high.

Despite the tragedy, though, there is a silver lining. Cannabis stocks are at their lowest point in history.

Today, I’m going to talk about one of the group’s most undervalued stocks.

GrowGeneration Corp (NASDAQ: GRWG) is the country’s leading reseller of cannabis-growing equipment and supplies.

Consider this corporation the Home Depot of the cannabis sector in the United States. This is where multi-million dollar grow enterprises get their supplies and resources. GrowGen also supplies materials and equipment to home gardeners.

More than 10,000 goods are available at the company’s shop and online. Complete commercial growth systems, a commercial air pump, and a commercial water pump are among the items shown on the company’s website.


GrowGen has been growing its national reach via a series of acquisitions and organic expansion over the previous two years. The corporation now has 62 retail sites in 13 states, totalling 950,000 million square feet.

The expansion approach is paying well. GrowGen has had massive revenue growth in the previous twelve months, as shown by third-quarter numbers released in early November.

Revenue increased by 105 percent year over year in the third quarter.

  • Revenues of $116.0 million in the third quarter of 2021 were a new high, compared to $55.0 million in the same time previous year.
  • In the third quarter of 2021, same-store sales at 25 sites open for the same time in 2020 and 2021 were $59.2 million, up from $51.2 million in the third quarter of 2020, a 15.7 percent gain year over year.
  • Based on a basic share count of 58.5 million, net income was $4.0 million, or $0.07 per share.

GrowGen’s web business is also doing well. E-commerce sales increased to $10.5 million from $3.9 million the previous year.

In the future, we anticipate GrowGen to maintain its excellent sales growth. GrowGen has spent millions of dollars expanding and acquiring rivals.

  • In September 2021, two new venues in Los Angeles County opened.
  • In the first quarter of 2022, a sixth Oklahoma site in Ardmore is expected to open.
  • Several other fulfillment facilities are in the works, including a 25,000-square-foot facility in Phoenix, Arizona, and a 58,000-square-foot one in Medley, Florida, which opened recently.

There is a lot of good news here, as you can see. GrowGen is a high-yielding stock. Despite the excellent news, Growgen’s stock has been hammered in 2021. The stock is down 62 percent year to date and 76 percent off its 52-week high. Take a look at the graph below for 2021.


Why Have Stocks Dropped So Much?

There were two factors that contributed to the stock market’s struggles in 2021.

  • In 2021, GrowGen’s stock has been pulled down by the overall cannabis sector’s downturn. The cannabis sector in the United States is thriving in 2021, but cannabis stocks have had a bad year due to investors’ frustration with the lack of movement on federal legalization.
  • GrowGen’s full-year sales estimate was recently reduced from $475 million to $435-$400 million. Despite the decrease, analysts still expect sales growth of 21% next year.

After this drop in 2021, cannabis companies in the United States are woefully cheap in comparison to possible future growth rates. GrowGen is also one of the most undervalued companies in the cannabis industry.

The price-to-sales ratio for GrowGen is 2.5. This is a significant discount to the S&P 500’s P/S ratio of 3 and to how other growth sectors and equities are priced. Tesla (NASDAQ: TSLA) has a P/S ratio of 27, and sales are predicted to increase by 38% next year.

GrowGen in the Big Picture

GrowGen’s stock has plummeted this year as the cannabis industry as a whole has struggled, and the company’s revenue growth has been downgraded somewhat.

The good news is that analysts continue to anticipate GrowGen to achieve strong revenue growth over the next several years, and the company seems to be inexpensive in comparison to other growth companies and industries. In the immediate term, expect volatility.

GrowGen shares could gain in the long term from ongoing revenue growth and a higher valuation as investors recognize the company’s growth narrative is still intact.

Author Bio & Cannabis Stock Trading

Michael Vodicka is a stock analyst with over 20 years of trading and investment expertise. His work has been published in some of the industry’s most prestigious journals. Since 2013, he has been investing and directing investors in the cannabis industry.

Michael Vodicka

Members of Cannabis Stock Trades benefit from Mr. Vodicka’s knowledge and advice.

Join Cannabis Stock Trades for unique research, trade alerts, and a model portfolio from Mr. Vodicka.

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The “grwg investorplace” is a stock that has seen a 76% decline in the last year. However, this growth stock is still undervalued and could be a great investment.

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