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 Hydrofarm Holdings Group, Inc. (NASDAQ:HYFM) 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 large field of sunflowers under bright agricultural lighting.
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.
Overall HYFM ranks 4th on our list of the best vertical farming and hydroponic stocks to invest in now. While we acknowledge the potential of HYFM 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 HYFM but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
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Disclosure: None. This article is originally published at Insider Monkey.
