11 Best Cannabis Stocks To Invest In

1. The Scotts Miracle-Gro Company (NYSE:SMG)

Number of Hedge Fund Holders: 28

The Scotts Miracle-Gro Company (NYSE:SMG) is the world’s largest marketer of branded consumer products for lawn and garden care. The Ohio-based company has applied its expertise in horticulture and gardening to develop innovative technologies and solutions specifically tailored for cannabis cultivation.

In Q4 of 2024, net sales of The Scotts Miracle-Gro Company (NYSE:SMG) rose 10.7% YoY to $414.7 million and surpassed the consensus estimates of $393 million. The uptick was due to higher sales in the US consumer division, where sales went up by 54% to $309.7 million, driven by the normalization of shipment timing. However, the company still ended the quarter with a loss of $244 million, though it was much better than the $468.4 million loss it suffered in the same period last year. Moreover, it ended the fiscal year 2024 with adjusted EBITDA growth of 20%, finishing at $539 million, despite a lawn and garden market that was down overall.

The Scotts Miracle-Gro Company (NYSE:SMG) has been facing several challenges over the last few years, including high debt and an unsustainable cost structure due to a decrease in demand after the pandemic. Consequently, the company has made some hard decisions to right-size its business and cut over $400 million in operating expenses. These decisions included mass layoffs and the closure of distribution facilities, leading to a loss of talent and hindering the company’s ability to innovate, which is crucial given the shifting market dynamics.

The Scotts Miracle-Gro Company (NYSE:SMG)’s $1.5 billion investment into its Hawthorne segment has proven to be a very costly affair. In 2023, Hawthorne’s revenue fell dramatically, and the business reported a loss of $50 million. However, SMG announced in its Q4 2024 earnings call transcript that it has managed to dismantle Hawthorne to make it a much smaller and more profitable business, while also reinvesting $100 million into its brands, sales force, supply chain, and innovation.

Shares of The Scotts Miracle-Gro Company (NYSE:SMG) were held by 28 hedge funds in the IM database at the end of Q3 2024, making it the Best Marijuana Stock According to Hedge Funds.

Overall, The Scotts Miracle-Gro Company (NYSE:SMG) ranks first on our list of the best marijuana stocks. While we acknowledge the potential for SMG to grow, our conviction lies in the belief that some AI stocks hold greater promise for delivering higher returns and doing so within a shorter time frame. If you are looking for an AI stock that is more promising than SMG but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.

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