8 Best Vertical Farming and Hydroponic 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) owns and operates Hawthorne Gardening Company, which is a leading provider of hydroponic and indoor gardening products. The company’s Hawthorne segment sales fell 46% to $80.5 million as compared to $149.7 million in Q4 2023. This was mainly because of Hawthorne’s exit from the distribution of third-party brands and a decline in sales from its professional horticultural lighting business. However, The Scotts Miracle-Gro Company (NYSE:SMG) has been focusing on positioning its Hawthorne business.

Analysts are optimistic about the strategic move from distributing third-party products to focusing solely on its market-leading brands. Through consolidation of operations, exit from non-core markets, and inventory optimization, The Scotts Miracle-Gro Company (NYSE:SMG) continues to emphasize making Hawthorne business smaller and more profitable. The company streamlined Hawthorne’s operations by consolidating facilities, warehouses, and distribution centers to cut fixed costs.

Furthermore, Hawthorne exited less profitable or non-core product categories to concentrate on its most successful offerings, like hydroponic systems, grow lights, and nutrients. Moving forward, The Scotts Miracle-Gro Company (NYSE:SMG)’s Hawthorne business is well-placed to see strong growth given its R&D investments to establish cutting-edge hydroponic and indoor gardening solutions, including energy-efficient grow lights, improved nutrient formulations, and automation systems. Furthermore, the Hawthorne business is targeting the cannabis industry, which relies heavily on hydroponics for cultivation.

While we acknowledge the potential of SMG as an investment, our conviction lies in the belief that some deeply undervalued AI stocks hold greater promise for delivering higher returns, and doing so within a shorter timeframe. If you are looking for a deeply undervalued 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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