In this article, we will discuss the 8 Best Vertical Farming and Hydroponic Stocks to Invest In.
Vertical farming refers to producing food in vertically stacked layers, like in a used warehouse, skyscraper, or shipping container. Hydroponic agriculture refers to a technique for cultivating plants without traditional soil and replacing them with a mineral solution placed around plant roots.
The global agricultural sector continues to undergo a transformative shift. This transition stems from the increased demand for sustainable, efficient, and locally-produced food. Innovative strategies such as vertical farming and controlled environment agriculture (CEA) have emerged and these are offering promising solutions to revolutionize food production.
There are several SMEs and start-ups leading the charge in vertical farming and controlled environment agriculture. Ranging from small-scale urban farms to well-established high-tech agricultural operations, these organizations have been revolutionizing food production, courtesy of innovation, sustainability, and efficiency. For example, AeroFarms has been reforming agriculture with its advanced aeroponic systems. These systems utilize 95% less water and 99% less land when compared to traditional methods. Also, the company’s fully automated systems grow pesticide-free leafy greens year-round, offering superior flavor and nutrition.
Another company is Zero Carbon Farms, which focuses on repurposing underground air raid shelters in London into climate-controlled vertical farms. The company’s innovation capabilities help in growing microgreens and herbs by using 70%-90% less water and 95% less fertilizer than traditional agriculture. By carrying out operations underground, it significantly reduces emissions while offering fresh produce locally.
Growth Drivers and Trends – Vertical Farming and Hydroponics
As per IMARC Group, US hydroponics market size touched US$3.3 billion in 2024. Moving forward, the market is expected to reach US$6.5 billion by 2033. The increasing need among critical players to provide a more resilient and efficient approach to food production, as a result of evolving environmental and demographic pressures, has been fueling market growth across the country. A transition towards innovative and sustainable agricultural practices is one of the critical trends driving growth in the hydroponics market.
The global vertical farming market was pegged at US$6.8 billion in 2024, according to IMARC. This market should reach US$36.8 billion by 2033. The increased demand for sustainable agriculture methods, robust advancements in hydroponics, aeroponics, and aquaponics focused on improving crop yields, and implementation of favorable government policies are some of the drivers fueling this market growth. Also, several governing bodies have been acknowledging the advantages of vertical farming in improving food security and lowering environmental effects.
With this in mind, we will now have a look at the 8 Best Vertical Farming and Hydroponic Stocks to Invest In
A combine harvesting crops, showing the capabilities of the company’s agriculture equipment.
Our Methodology
To list the 8 Best Vertical Farming and Hydroponic Stocks to Invest In, we conducted extensive research and sifted through several online rankings. After the research, we chose the following 8 stocks which were popular among hedge funds and that analysts saw upside to. Finally, the stocks were arranged in ascending order of the hedge fund sentiment surrounding them.
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8 Best Vertical Farming and Hydroponic Stocks to Invest In
8) Local Bounti Corporation (NYSE:LOCL)
Number of Hedge Fund Holders: N/A
Local Bounti Corporation (NYSE:LOCL) uses vertical farming techniques, growing plants in stacked layers within controlled indoor environments. This maximizes space utilization and allows for year-round production. Local Bounti Corporation (NYSE:LOCL)’s patented Stack & Flow Technology® has been tagged as a key innovation, improving crop yields, output, and economics. The company’s indoor farming practices are regarded as more sustainable than traditional methods, using significantly less land and water.
Wall Street analysts remain optimistic about Local Bounti Corporation (NYSE:LOCL)’s growth prospects given that it received a 2-year award from a large multinational retailer to supply its living butter lettuce product to 13 of the retailer’s distribution centers from its California and new Texas facilities. While the retailer’s name was not disclosed in the press release, the agreement reflects the growing demand for fresh, sustainable, locally grown produce and demonstrates Local Bounti Corporation (NYSE:LOCL)’s commitment to addressing such needs via expanded operations throughout the southern US. The company expects that this strategic partnership will enhance its performance and can help in achieving positive adjusted EBITDA, which is expected during Q2 2025.
Furthermore, there are plans to build additional capacity across the Local Bounti Corporation (NYSE:LOCL)’s network of facilities enabled by its Stack & Flow Technology®. The planned expansions are focused on providing additional capacity and enabling the company’s growing product assortment to address existing demand from its direct relationships with blue-chip retailers and distributors. This strategy has been yielding results. In Q3 2024, Local Bounti Corporation (NYSE:LOCL) delivered a 50% YoY growth in sales while advancing its commercial strategy via expansion of product mix and deepening relationships with blue-chip retail partners. Wall Street analysts offered a 1-year price objective of $8.16 on the shares of the company.
7) Agrify Corporation (NASDAQ:AGFY)
Number of Hedge Fund Holders: 1
Agrify Corporation (NASDAQ:AGFY) operates in the controlled-environment agriculture (CEA) industry, specializing in advanced cultivation solutions. The company’s product portfolio includes Vertical Farming Units (VFUs) that use a modular and stackable design to enable cultivation in a vertical setup, a hallmark of vertical farming. Agrify Corporation (NASDAQ:AGFY) focuses on high-value crops such as cannabis for growth because of market dynamics, and its proprietary technology’s suitability for such crops. It is suitable because the proprietary technology results in cost and resource efficiency, scalability and flexibility, and data-driven cultivation.
Wall Street analysts opine that Agrify Corporation (NASDAQ:AGFY)’s VFUs allow precise control over temperature, humidity, lighting, CO₂ levels, and nutrient delivery for each crop tier. Furthermore, with the company’s focus on high-value crops such as cannabis, these VFUs offer growers the tools to meet strict regulatory standards and produce premium-grade products. On a related note, Agrify Corporation (NASDAQ:AGFY) closed on its previously announced acquisition of certain assets from Double or Nothing LLC, the owner and creator of the Señorita brand of hemp-derived THC drinks.
Wall Street analysts believe that growth in cannabis production should benefit Agrify Corporation (NASDAQ:AGFY). This is because cannabis production is subject to strict regulations regarding quality, potency, and consistency. Agrify Corporation (NASDAQ:AGFY)’s vertical farming units enable growers to meet these standards with precision.
6) urban-gro, Inc. (NASDAQ:UGRO)
Number of Hedge Fund Holders: 2
urban-gro, Inc. (NASDAQ:UGRO) focuses on offering integrated facilities solutions for indoor growing environments, which are foundational to modern vertical farming and hydroponics. While the company has established a strong foothold in the cannabis sector, it has been actively diversifying into other high-growth markets as well. Vertical farming of leafy greens, herbs, and berries continues to experience strong demand as a result of urbanization and sustainability concerns, which should support its growth prospects.
urban-gro, Inc. (NASDAQ:UGRO) is well-placed to fuel growth in the indoor growing environments sector with the help of its expertise, expansion of its offerings, and alignment with industry trends. Furthermore, the application of controlled environment agriculture (CEA) in producing medicinal plants and other biotech solutions provides new opportunities. As per Wall Street, urban-gro, Inc. (NASDAQ:UGRO) can support specialty crops such as exotic herbs or rare plants with the help of its hydroponic expertise, which should aid its growth prospects.
Next, the growth of the cannabis industry should act as a significant driver for the company’s business prospects. This is because urban-gro, Inc. (NASDAQ:UGRO) has positioned itself as a leading provider of controlled environment agriculture (CEA) solutions suited for cannabis cultivation. On a related note, urban-gro, Inc. (NASDAQ:UGRO) announced the launch of its new Processing and Extraction Division. In lieu of further expanding its sector offering, this strategic expansion delivers cutting-edge solutions designed to optimize cannabis facilities for post-harvest operations.
5) iPower Inc. (NASDAQ:IPW)
Number of Hedge Fund Holders: 3
iPower Inc. (NASDAQ:IPW) has a core business focus on providing equipment, supplies, and solutions tailored to controlled-environment agriculture (CEA), which includes vertical farming and hydroponics. The company is an online supplier of consumer goods, such as hydroponics equipment, general gardening supplies, and consumer home goods. The company generates revenues mainly by selling its products and services in the controlled-environment agriculture (CEA) industry, with a significant focus on hydroponics and indoor growing.
As per Wall Street analysts, urbanization and the shift towards vertical farming are boosting demand for hydroponic systems and supplies, where iPower Inc. (NASDAQ:IPW) is well-positioned to meet customer needs. Total revenue in Q1 2025 came in at $19.0 million as compared to $26.5 million for the same period in fiscal 2024. The decrease was mainly because of increased promotional activity related to selling down inventory in the year-ago period.
However, analysts opine that iPower Inc. (NASDAQ:IPW)’s diversified product portfolio and e-commerce advantage should help drive revenue growth in the upcoming quarters. iPower Inc. (NASDAQ:IPW) has partnered with Amazon Logistics Services to enhance the delivery capabilities of its SuperSuite platform. This integration focuses on offering better last-mile delivery options to SuperSuite clients by using Amazon’s extensive delivery network.
4) Hydrofarm Holdings Group, Inc. (NASDAQ:HYFM)
Number of Hedge Fund Holders: 5
Hydrofarm Holdings Group, Inc. (NASDAQ:HYFM) is a leading supplier of controlled environment agriculture (CEA) equipment and solutions. These include hydroponic systems, vertical farming equipment, and other tools used for growing plants without soil. Wall Street analysts believe that Hydrofarm Holdings Group, Inc. (NASDAQ:HYFM)’s focus on growing its proprietary brand sales should continue to support its long-term growth outlook.
The company continues to invest in innovation and the development of new proprietary products in a bid to address the growing demand for hydroponic and vertical farming solutions. This consists of creating advanced grow lights, hydroponic systems, and climate control solutions. By rolling out unique and high-quality products, Hydrofarm Holdings Group, Inc. (NASDAQ:HYFM) can differentiate its proprietary brands in the marketplace.
Furthermore, Hydrofarm Holdings Group, Inc. (NASDAQ:HYFM) has been focusing on strategic acquisitions to expand its portfolio of proprietary brands. These acquisitions help in enhancing product offerings by adding complementary brands that are renowned in specific areas of the CEA industry. For example, Hydrofarm Holdings Group, Inc. (NASDAQ:HYFM) acquired brands like Sunlight Supply, which is renowned for its high-quality hydroponic products, strengthening its proprietary brand portfolio. These strategies continue to pay off, with its proprietary brands sales representing 56% of total net sales as compared to 54% in the prior-year period. The company remains focused on strategically investing in its key proprietary brands as it looks to meet growers’ evolving needs.
3) GrowGeneration Corp. (NASDAQ:GRWG)
Number of Hedge Fund Holders: 6
GrowGeneration Corp. (NASDAQ:GRWG) owns and operates retail hydroponic and organic gardening stores in the US. Industry experts opine that the company has increased the sales of its proprietary brands, such as Char Coir and Drip Hydro, which provide higher margins. This is because they eliminate intermediary costs and enable the company to capture a larger share of the revenue, fueling profitability.
GrowGeneration Corp. (NASDAQ:GRWG) closed underperforming stores to focus on higher-performing locations, reducing its store count from about 65 to 31. This restructuring focuses on streamlining operations and improving profitability. In the current year, the company closed 19 stores and, on a YoY basis, it closed down 25 stores. Furthermore, the closures form part of GrowGeneration Corp. (NASDAQ:GRWG)’s strategic plan to streamline its focus on proprietary brands and digital sales.
As per Wall Street analysts, the company’s strategy has started to work. GrowGeneration Corp. (NASDAQ:GRWG)’s proprietary brand sales as a percentage of Cultivation and Gardening net sales for Q3 2024 increased to 23.8% as compared to 19.4% for the same prior year period. This is tracking well against the company’s goal to grow proprietary brand sales to 35% in 2025. Furthermore, GrowGeneration Corp. (NASDAQ:GRWG)’s same-store sales saw growth of 12.5% YoY in Q3 2024, reflecting the strong performance of its core store locations as the company right-sizes its retail footprint. Wall Street analysts gave a price target of $4.00 to shares of the company.
2) Village Farms International, Inc. (NASDAQ:VFF)
Number of Hedge Fund Holders: 6
Village Farms International, Inc. (NASDAQ:VFF) is a large-scale, controlled environment agriculture-based, vertically integrated supplier of high-value, high-growth plant-based consumer packaged goods. The company’s principal operating subsidiaries are Village Farms Canada Limited Partnership, and Village Farms, L.P., together known as Village Farms Fresh or VF Fresh. Village Farms Fresh’s wholly owned subsidiary, Pure Sunfarms, is a vertically integrated licensed producer and supplier of cannabis products sold to customers across Canada and internationally. Notably, the link between cannabis products and vertical farming is in the efficiency, sustainability, and quality control provided by vertical systems.
Village Farms International, Inc. (NASDAQ:VFF) uses hydroponic and vertical farming methods to grow cannabis efficiently. This results in high yields per square foot. Furthermore, with large-scale greenhouses already operational, the company can scale cannabis production without requiring significant new capital investments. As per Wall Street analysts, Village Farms International, Inc. (NASDAQ:VFF)’s growth is expected to be aided by continued momentum in the Canadian cannabis market.
Pure Sunfarms brand is one of the most renowned brands in the Canadian market, which is popular for its high-quality and cost-efficient production. As legalization expands to include additional product categories, Village Farms International, Inc. (NASDAQ:VFF) is well-placed to capitalize on these new opportunities. The strong performance in the company’s Fresh Produce business, continued growth in Canadian Cannabis, and a doubling of International Medicinal Cannabis Sales resulted in 20% YoY growth in consolidated sales, with both positive adjusted EBITDA and cash flow from operations during Q3 2024. The company’s consolidated sales came in at $83.4 million in Q3 2024.
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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