Our GrowGeneration Stock Forecast Shows the Hype Is Justified

GrowGeneration's 40% rally since May 13 is making this a must-watch stock.

But should investors be adding GrowGeneration stock to their portfolio right now?

We're going to take a deep dive into this company to show you why CRWG is rallying right now and why this hot stock is worth owning.

Here's what we uncovered...

Why GrowGeneration Stock Is Soaring

Shares of GrowGeneration Corp. (NASDAQ: GRWG) have been on fire since the company reported earnings in mid-May. Since reporting that revenue was up by 173% year over year, the stock has shot higher by a little over 40%. The company also announced that it had added 15 new stores in the quarter to bring the total number of locations to 53.

CEO Darren Lampert also raised his guidance for the full year and now expects GrowGeneration to have total sales of between $450 million and $470 million with earnings before interest taxes, depreciation, and amortization of between $54 and $54 million.

The results were way above analyst expectations. As a result, the Wall Street firms covering the stock are now scrambling to raise their estimates for the rest of 2021 and the full year 2022. Currently, the consensus expectation is for the company to earn $0.52 a share in 2021 compared to just $0.11 last year and keep growing to $0.74 in 2022.

GrowGeneration owns and operates a chain of retail hydroponic and organic gardening stores in the United States. You can buy everything from specialty lighting fixtures to seeds and fertilizers to irrigation systems. It's a one-stop shop for growing plants. While the products can be used for a wide range of so-called urban crops, it's not exactly a secret that GrowGeneration caters to growers of marijuana.

Its stores are located in states that have passed either medical or full recreational usage laws for cannabis. Its biggest market right now includes its home state of Colorado, California, and Michigan. It also has stores in Nevada, Arizona, Rhode Island, Oklahoma, Oregon, and Florida.

Plus, GrowGeneration has an e-commerce site that sells all over the United States.

While it sells to the home grower, GrowGeneration also sells supplies to some of the biggest brand names in the cannabis industry. In addition, it can offer commercial growers direct-to-farm delivery service along with equipment financing for the tools and equipment needed to build and grow their cannabis operations.

The combination of growth, suddenly optimistic forward guidance, and CRWG's connection to a hot growth sector like cannabis is enough to justify the rally.

But whether to own the GrowGeneration stock is another question...

Our GrowGeneration Stock Forecast for 2021

Unless you have been living under a rock for the past decade or so, you know how powerful the cannabis trend is becoming in the United States. Thirty-six states have legalized medical marijuana, and 16 have legalized adult recreational usage of weed. It's a growing market that will become downright parabolic when the federal government finally ends its prohibition of the plant.

And a company like GrowGeneration is going to tap right into the growth.

Owning GrowGeneration is like selling picks and shovels to the miners in the California gold rush. It doesn't matter to you which miners get rich and which go bust.

You make your money from selling equipment.

GrowGeneration doesn't care which of its customers make it big and which ones don't make it. It already got paid when the equipment was sold.

It doesn't care if its retail customers run afoul of the law for growing more at home than the law allows. It already got paid.

That's great for investors too because you don't have to worry about backing the wrong horse.

Right now, there are over 1,000 hydroponic stores in the United States, and it is a very fragmented market. There are hundreds of one- and two-store Mom and Pop shops around the country. GrowGeneration has a real opportunity to grow by acquisition and roll many of these stores up into a powerhouse industry leader.

For the near term, GrowGeneration intends to focus on buying hydroponic stores in Missouri, Illinois, Arizona, Pennsylvania, New York, and New Jersey.

GrowGeneration can become the Home Depot Inc. (NYSE: HD) of the cannabis industry over the next several years.

The stock has solid momentum since the earnings report. If it can maintain the momentum into next quarter's report and GrowGeneration once again posts a positive earnings surprise, the stock could easily take off and beat the current 52-week high of $67.75.

The price could be helped because GrowGeneration was included in the Russell 2000 index at the end of June, and index buyers will provide additional buying pressure to support a higher move in the stock price.

We would use the 50-day moving average, currently around $43, as a good place for an initial stop-loss order.

GrowGeneration is certainly a stock to watch and worthy of an add to your portfolio if you have the funds for it. If you're planning to buy it, you'll want to own it before more states or the federal government legalizes marijuana. That's when the growth can get really exciting.

The 20 Best 5G Stocks to Target Now

As 5G barrels into every town in America at breakneck speed, the domino effect will be historic – and more importantly, it could launch each one of Tech Investing Specialist Michael Robinson’s top 5G stocks up 1,000X by year-end. Here’s what you need to know…

Follow Money Morning on Facebook and Twitter.