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GrowGeneration Corp.

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GRWG trade ideas

Cannabis Industry finds new GrowthBackground Although still illegal at the federal level, more and more states are legalizing the recreational use of Marijuana. There are 15 states that have legalized recreational use (included seven in the most recent election), 15 states that have decriminalized its use (you'll get a misdemeanor), and 26 states that allow some level of home or commercial growing of Cannabis. There is only one state that still considers recreational Marijuana. The democratic controlled house recent voted to decriminalize marijuana at the federal level, leaving it up to states to set and enforce laws regarding its use. Although the bill still faces challenges to pass thru the senate, it is expected that this action will happen within Biden's first term. Types of Cannabis Companies Many companies play more than one role in the Cannabis industry. You can break those roles into: 1) Cultivation - grow and process the cannabis plant. 2) Product Manufacturing - create products using Marijuana or Hemp 3) Agricultural Tech - produce and sell equipment and technology to help grow cannabis 4) Real Estate - Financial companies that lease land to cannabis growers 5) Consumption Devices - produce tools and products for consuming Marijuana products 6) Tech and Media - online services, advertising, sales Top Performers These are some of the top performers for 2020 in the Cannabis industry: GRWG - Agriculture Tech- 842.68% PW - Real Estate - 245% TCNNF - Cultivation - 177.03% IIPR - Real Estate - 148.50% GTBIF - Manufacturer - 139.59% CURLF - Finance - 102.12% CCHWF - Manufacturer - 88.96% GrowGeneration GrowGeneration is the largest retailers of hydroponic products in the United States and is engaged in the business of marketing and distributing horticultural, organics, lighting and hydroponics products, including lighting fixtures, nutrients, seeds and growing media systems, trays, fans, filters, humidifiers and dehumidifiers, timers, instruments, water pumps, irrigation supplies and hand tools. They make products that help grow Cannabis (and other less popular plants). Fundamentals Market Cap - 1.8b Last three quarters sales YoY +152%, +123%, +153% Last three quarters EPS - -0.06, 0.06, 0.06 Fund Ownership 41%, Management Ownership 14% Listed since December 2019 Technicals 1320% price increase since March lows 90% growth since 11/11 Earnings release 50d MA is 33% below the most recent close, very extended Broke into new highs last week 10d ATR of 7.6% is high Buy Point Buy Point: 39.10 10d ATR (x2.7) Stop: 31.07 (20.54%) Position Size: R4.87 (Small) This one will be choppy and requires a looser stop. It's better just to keep it in the watch list, waiting for a better entry. If you do jump in, use very small position size and pyramid up as the investment proves its working.
NASDAQ:GRWG
by drewby4321
59
GRWG - Bull FlagPretty good week for GRWG up $5! Looking at Fridays chart 12/18/20 Chart it hit ATH @ $39.80. According to the chart it looks like we could run up to $42. Currently holding a $39 call 12/24 exp. MACD still looks bullish into weekend. Being quadwitching and a Friday there was a little sell off towards the end ($38.13) but in the last 30 min to market close we saw a strong recovery ($38.69). This tells me that the bulls are still in control of the market and may see a continuation into next week. With potential stimulus and legalization coming up I can see this easily 50+ by the end of next year. LMK what you see!
NASDAQ:GRWGLong
by DarthTrador
1
GRWG Breakout of Bull FlagThis stock has been moving higher and looks great. Due to the spread on options, I purchased 100 shares on a bull flag breakout. I have set alerts. The company sells products in the marijuana industry. Will keep eye on it, seems like a growing area and may turn out to be a long term investment opportunity...will continue to study it but for now target is about $18 higher from the bull flag. MACD is not confirming so a bit more risky and volume not huge here as of today. Could be fake out - on scale of 1-10 ...it is a 6 breakout vs a higher point so more risk possible.
NASDAQ:GRWGLong
by Vince
GRWG - A Bear CaseWeighing both impending federal policy changes and strong fundamentals, GrowGeneration (GRWG) looks like a promising cannabis stock to buy & hold. With an incoming Biden administration, federal cannabis decriminalization will happen, paving the way to allow banking institutions to service the industry. While GRWG doesn’t operate in the agricultural or distribution segments of the cannabis plant (most impacted from federal banking regulations), it will benefit when legal barriers are removed. As a distributor sales channel of hydroponic equipment and consumable products used to grow cannabis, GRWG stands to benefit from a large shift in federal policy and has already benefited from state policies legalizing both medical and recreational cannabis use. With everything good happening to the cannabis industry, I lay out a bear case for GRWG and why it should not be bought as an investment. Executive leadership is the primary reason GRWG is uninvestable. Hindenburg Research, an activist short seller, has published findings detailing the company’s leadership indiscretions going back decades...and it’s ugly. Strong executive leadership teams should display the industry’s best business minds, squeaky clean personal backgrounds, and a track record of wins in previous business dealings. Hindenburg brings to light GRWG’s leadership’s ties to prior penny stock pump & dump schemes, various SEC entanglements, personal relationships with known persons associated with criminal syndicates, various failed business ventures, financial accounting gaps … the list goes on and on and on. Before moving forward, let’s call a spade a spade: the purpose of Hindenburg’s research is to convince investors to sell GRWG. Hindenburg has a publicly stated short position in GRWG and has an agenda to drive the stock price down. They directly benefit from painting this company or its leadership in a negative light. One should take the research with a grain of salt when weighing its importance in a decision to buy or sell the stock. While Hindenburg Research’s findings were enough for me to sell my position, I found this wasn’t the only red flag. Following Bill O’Neil’s CANSLIM methodology when analyzing stocks, one of the metrics is Cash Flow per Share vs EPS. Cash Flow per Share for a great stock should be +20% greater than EPS in the same quarter. Starting with FY2019, they posted four quarters of Cash Flow per share equaling EPS; a 0% increase in Cash Flow per Share vs EPS. FY2020 was shaping up with Q1 & Q3 having both +16.6% Cash Flow per Share increases vs EPS. 2020Q2 posted a -83.3% decrease of Cash Flow per Share vs EPS. I would normally give this one miss a pass due to their strong sales growth over the past 8 quarters, increasing more than 125% (QoQ vs PY Q) and strong EPS growth over the past 6 of 7 quarters (QoQ vs PY Q) because, we’re measuring the total sum and not measuring just one metric. But, I also wanted to deep dive that 1 quarter (1 of 7) where EPS contracted. At first glance, the -700% decrease in EPS vs PY Q occurred in 2020Q1 and my first inclination was, it must have been the impact on their business due to COVID-19. I dug deeper into their 10Q and read: The net loss for the quarter ended March 31, 2020 was primarily due to the increase in share-based compensation from approximately $80,000 in 2019 to $4.1 million for the quarter ended March 31, 2020. … If the new share-based awards effective January 1, 2020 were level vesting over two years and not front loaded vesting then the first quarter of 2020 expense would have been reduced by approximately $2.43 million and the first quarter of 2020 net loss would have been net income of approximately $332,000. Future periods share-based compensation would increase as a result of spreading the $2.35 million over two years, had the awards been level vested. TRANSLATE: Management decided to bump up compensation all at once vs spreading it out over the next two years and by doing that, hurt earnings for the quarter. What kind of forward thinking, long-term oriented management team would do that? With everything good happening in this industry, management couldn’t have taken compensation increases over the next two years in order to preserve positive momentum the in their fundamentals? I suppose spreading it out over the future 8 quarters could put stress on future earnings, but then, maybe this isn’t the time to increase compensation if it can’t be successfully managed. I get it, an increase in executive compensation after growing at an insane clip for the past 5 quarters feels earned, but great business leaders are supposed to be the harbingers of good faith with the intention of growing the stock price for all shareholders. There was no better way to increase compensation? In my opinion, this decision represents terrible judgment at worst and poor planning at best. This was red flag strike number 3. 1) Hindenburg Research 2) Cash Flow per Share vs EPS not hitting the mark 3) Management throwing a wrench into earnings, when they had the option to otherwise not, in order to benefit themselves. For these reasons, GRWG is entirely uninvestable. In all honesty, if we play devil’s advocate and assume everything in Hindenburg’s Research is true, that is more than enough reason to not own this stock. I encourage everyone to read it in order to familiarize themselves with what a worst case scenario looks like. The overall fundamentals in this stock look pretty damn good and even Hindenburg states, “... bulls would likely argue that the business is positioned well to consolidate its industry niche and grow into its numbers with the backing of strong management.” Unfortunately, that does not seem to be the case. When heeding activist research, be skeptical when talking heads make claims like the those laid out in Hindenburg’s piece. They have a short position; they want the stock to go down. Gauge your own risk profile and trading style. Do your own homework. Happy Stock Picking!
NASDAQ:GRWGShort
by MichaelGoldberg
4
GRWG Long Term Hold and a Play Into Earnings Huge beat last earnings. Slow run up and then a spike after. I expect earnings to be priced in a bit here and we get a better run up leading in. I think we have to take profits prior to earnings though if the market prices in a beat or at least solid earnings. Earnings 11/16/2020 I'll be buying the dip again after we find a bottom after following earnings. Some industry factors to consider. There are major flaws in the business models of many cannabis sector stocks. Most are trying to be the cannabis supplier for the recreational, medicinal and CBD industries. - recreational you have to compete with the black market and local growers. And you have to wait and pray for more state adoption. 11 states allow for recreational use. - medicinal breakthroughs have been mostly speculative. Seems slow at best. 33 states allow for medicinal - CBD usage I think its safe to compare to lower level Vitamin usage. When I see CBD energy drinks and CBD shots marketed at your local gas station, I start thinking that CBD is a fad kind of thing that may not go anywhere. Only 3 states do not allow CBD. In addition, as states open up their cannabis laws, I believe more legal competition for the supply will open up as well. In Florida, which would be a giant boost in the recreational demand, I know for a fact that the legislative supporters of legalization are pretty adamant about keeping that supply in state as much as legally possible. A lot full supply chain to to retail market business models out there with major money backing it. This doesn't bode well for may stocks in this sector. However, there is a growing demand for people growing their own cannabis, as well as, there own organic gardening. People are home more and gardening hobbies are picking up. States also support grow your own more than they support buying it at a weed store. 17 states support growing your own, while 11 states support recreational use. They have a solid business model to supply this industry as wholesale distributers as well as 18 retail locations and growing. Well positioned to support the hydroponic and organic gardening demand. I think there is long term and short term value here.
NASDAQ:GRWGLong
by zephin
7