We recently compiled a list of the 8 Best Vertical Farming and Hydroponic Stocks to Invest In. In this article, we are going to take a look at where GrowGeneration Corp. (NASDAQ:GRWG) stands against the other vertical farming and hydroponic stocks.
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.
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.
At Insider Monkey we are obsessed with the stocks that hedge funds pile into. The reason is simple: our research has shown that we can outperform the market by imitating the top stock picks of the best hedge funds. Our quarterly newsletter’s strategy selects 14 small-cap and large-cap stocks every quarter and has returned 275% since May 2014, beating its benchmark by 150 percentage points (see more details here).
A farmer placing an accessory into a hydroponic system, filled with a nutrient-rich growing media.
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.
Overall GRWG ranks 3rd on our list of the best vertical farming and hydroponic stocks to invest in now. While we acknowledge the potential of GRWG 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 GRWG but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
READ NEXT: 8 Best Wide Moat Stocks to Buy Now and 30 Most Important AI Stocks According to BlackRock.
Disclosure: None. This article is originally published at Insider Monkey.
