In the ever-growing cannabis market, there are three undervalued cannabis stocks that you should consider adding to your portfolio. WM Technology (MAPS) is the company behind Weedmaps, the leading online platform for cannabis enthusiasts, and has shown consistent growth in its customer base. Scotts Miracle-Gro (SMG) is a leader in consumer gardening products and has seen an increase in consumer sales in the U.S. Finally, Philip Morris International (PM) is known for its innovative tobacco products, such as IQOS ILUMA, which has reduced harmful substances and increased consumer satisfaction. These three stocks present great investment opportunities in the cannabis industry, so now is the perfect time to consider adding them to your portfolio.
WM Technology (MAPS)
WM Technology, also known as MAPS, is a significant player in the cannabis market. The company is behind Weedmaps, which is the leading online platform for cannabis enthusiasts. Despite a slight decline in revenue during the second quarter of 2023 compared to the previous year, MAPS has seen consistent growth in its customer base. However, the average revenue per monthly customer has declined. On a positive note, the company has shown improvement in adjusted EBITDA, indicating its ability to manage and optimize its financial performance. Furthermore, MAPS has no outstanding debt and holds $24.6 million in cash. This financial stability positions the company well for future growth.
To capitalize on the momentum of the cannabis industry, WM Technology has launched its “Power of Weed” campaign. This marketing initiative offers 20 Days of Deals leading up to 420, a significant date for cannabis enthusiasts. Throughout this campaign, consumers have the opportunity to take advantage of special offers, including exclusive products and new product launches. The campaign focuses on highlighting the best cannabis deals in adult-use markets across the country and is available in most markets where recreational cannabis is legal.
Scotts Miracle-Gro (SMG)
Scotts Miracle-Gro is a renowned leader in the consumer gardening products industry. The company offers a wide range of products for both outdoor and indoor gardening, including hydroponics. While Scotts Miracle-Gro faced challenges in the most recent quarter, particularly due to a decline in total sales caused by the pullback in its Hawthorne subsidiary, it has succeeded in increasing consumer sales in the United States. Additionally, the company has improved its cash flow and implemented a cost-savings program projected to save over $300 million. Although annual sales are expected to decline, Scotts Miracle-Gro has adjusted its credit agreement to provide more operating flexibility.
One noteworthy initiative by Scotts Miracle-Gro is its #ThinkWaterPositive campaign. This campaign reflects the company’s commitment to preserving water resources and promoting environmental responsibility. It involves various activities, such as water-saving product innovation, collaborations with non-profit organizations, and educating consumers about responsible water use in gardening, particularly in drought-prone regions. By integrating sustainability practices into its business model, Scotts Miracle-Gro demonstrates its dedication to both environmental and financial success.
In terms of leadership, Scotts Miracle-Gro has announced a succession plan for its President and Chief Operating Officer (COO), Mike Lukemire, who will retire in 2024. This careful planning ensures a smooth transition by promoting a seasoned executive, Nate Baxter, to the role of COO.
Philip Morris International (PM)
Philip Morris International (PM) is a prominent tobacco company known for its innovative approach to the industry. One of the standout products from PM is IQOS ILUMA, which heats tobacco instead of burning it, leading to reduced harmful substances and increased consumer satisfaction. PM’s commitment to innovation, coupled with its environmental responsibility, sets it apart in the market.
Financially, PM has reported strong performance, with impressive diluted Earnings Per Share (EPS) and adjusted EPS in the third quarter of 2023. The company has seen significant growth, particularly in currency-neutral terms, with a 20.3% EPS increase. PM has set ambitious earnings growth targets for the full year, projecting reported diluted EPS between $4.95 and $4.98, and adjusted diluted EPS between $6.05 and $6.08. These targets demonstrate PM’s confidence in its ability to continue delivering financial success.
Introduction to Undervalued Cannabis Stocks
The cannabis sector holds tremendous potential for growth and investment opportunities. As technology advances and its applications in health expand, discoveries within this sector continue to demonstrate the numerous benefits of cannabis consumption. Although this sector is still in its early stages, now is an opportune time to consider investing in undervalued cannabis stocks to maximize returns. Throughout this article, we will explore three undervalued cannabis stocks—WM Technology (MAPS), Scotts Miracle-Gro (SMG), and Philip Morris International (PM)—to help you make informed investment decisions.
Potential Growth of the Cannabis Sector
The cannabis sector has experienced significant growth in recent years, and it is expected to continue expanding. As more countries and states legalize the use of cannabis for medical and recreational purposes, the market size is projected to increase substantially. Additionally, the increasing social acceptance of cannabis has contributed to a growing consumer base. This combination of factors presents a favorable environment for the cannabis sector’s potential growth.
Benefits of Investing in Undervalued Stocks
Investing in undervalued stocks can offer several advantages for investors. Firstly, undervalued stocks often present an opportunity to buy assets at a lower price, allowing investors to potentially benefit from future price appreciation. Secondly, these stocks may have significant growth potential, especially if the company’s fundamentals show promise despite its current undervaluation. Lastly, investing in undervalued stocks can offer diversification to an investment portfolio, as these stocks may not be as closely correlated with broader market movements.
Factors to Consider Before Investing
Before investing in any undervalued cannabis stock, it is essential to consider several factors that can affect the overall investment decision. These factors include market analysis, company reputation, legal and regulatory environment, and competition analysis. By evaluating these factors, investors can better understand the risks and potential rewards associated with their investment.
Market Analysis
Conducting a thorough market analysis is crucial in understanding the current state and future prospects of the cannabis industry. Factors to consider include market size, projected growth rates, and market dynamics. Additionally, analyzing consumer trends and preferences can provide insights into potential opportunities and challenges within the market.
Company Reputation
Evaluating the reputation of a company is fundamental to making sound investment decisions. Investors should assess a company’s track record, management team, and corporate governance practices. A strong reputation built on trust and ethical practices is often an indication of a company’s potential for long-term success.
Legal and Regulatory Environment
The legal and regulatory landscape surrounding the cannabis industry can significantly impact a company’s operations and future prospects. Understanding the laws and regulations governing the sale, production, and distribution of cannabis products is critical for assessing a company’s compliance and mitigating legal risks.
Competition Analysis
Analyzing the competitive landscape is essential to determine a company’s positioning within the market. Investors should assess the market share, product offerings, and competitive advantages of a company relative to its peers. Understanding the competitive dynamics can help investors assess a company’s ability to capture market share and sustain growth.
WM Technology (MAPS) Overview
WM Technology, also known as MAPS, is the company behind Weedmaps, the leading online platform for cannabis enthusiasts. The platform connects consumers with dispensaries, delivery services, and other cannabis-related businesses. With its user-friendly interface and comprehensive database, Weedmaps has established itself as a go-to resource for cannabis users.
Business Description
WM Technology operates in the cannabis technology sector, providing the necessary infrastructure and tools to support the cannabis industry. The company focuses on leveraging technology to streamline the cannabis shopping experience and enhance consumer access to cannabis products.
Company History
WM Technology was founded in 2008 with the launch of Weedmaps, which quickly gained popularity among cannabis users. Over the years, the company has expanded its services and offerings to cater to the evolving needs of the cannabis market.
Current Market Position
As the leading online platform for cannabis enthusiasts, Weedmaps enjoys a strong market position. The platform has a vast user base and engages with millions of users monthly. This reach allows WM Technology to generate revenue through advertising partnerships with cannabis businesses and subscriptions from cannabis retailers.
WM Technology (MAPS) Financial Performance
Understanding a company’s financial performance is crucial to assessing its investment potential. Here, we will explore revenue trends, customer base growth, and net earnings and adjusted EBITDA for WM Technology.
Revenue Trends
While WM Technology experienced a slight decline in revenue during the second quarter of 2023 compared to the previous year, the company has shown consistent growth over time. This revenue decline may be attributed to various factors, such as market fluctuations or temporary challenges within the industry.
Customer Base Growth
Despite the slight decline in revenue, WM Technology has demonstrated growth in its customer base. The company has been successful in attracting and retaining cannabis enthusiasts on its platform, which contributes to the long-term sustainability of its business model.
Net Earnings and Adjusted EBITDA
WM Technology has reported net earnings, although there was a decline in the most recent financial period. However, an improvement in adjusted EBITDA, a measure of profitability, is a positive sign. This improvement indicates the company’s ability to optimize its operations and generate positive financial results.
WM Technology (MAPS) Marketing Campaigns
As part of its efforts to promote its platform and engage with consumers, WM Technology has implemented various marketing campaigns. Two notable campaigns by the company are the “Power of Weed” campaign and the offering of promotional deals and discounts.
Power of Weed Campaign
WM Technology launched the “Power of Weed” campaign to celebrate cannabis season. This campaign offers 20 Days of Deals leading up to 420, a significant date for cannabis enthusiasts. Throughout the campaign, consumers have access to special offers, exclusive products, and new product launches. The campaign aims to highlight the best cannabis deals available in adult-use markets across the country.
Promotional Offers and Deals
In addition to the “Power of Weed” campaign, WM Technology regularly offers promotional deals and discounts to its users. These offers incentivize consumers to use the Weedmaps platform and explore new products or dispensaries. WM Technology’s focus on providing value to its users through these promotional initiatives contributes to the company’s overall growth and engagement.
Scotts Miracle-Gro (SMG) Overview
Scotts Miracle-Gro is a leading company in the consumer gardening products industry. The company offers a diverse range of products for both outdoor and indoor gardening, including hydroponics. With its comprehensive product range and commitment to innovation, Scotts Miracle-Gro has established itself as a trusted name in the gardening community.
Business Description
Scotts Miracle-Gro focuses on creating innovative gardening solutions to enhance the gardening experience for consumers. The company offers a wide variety of products, including fertilizers, soils, plant foods, and gardening tools.
Product Range
Scotts Miracle-Gro’s product range covers all aspects of gardening, catering to both experienced gardeners and beginners. The company provides specialized products for various gardening needs, such as plant care, lawn care, and hydroponics. This extensive product range allows Scotts Miracle-Gro to serve a diverse customer base.
Hawthorne Subsidiary
Within the cannabis industry, Scotts Miracle-Gro operates its Hawthorne subsidiary. Hawthorne provides cultivation solutions for indoor cannabis growers, offering products specifically designed for the unique requirements of cannabis cultivation. This subsidiary has positioned Scotts Miracle-Gro as a significant player in the cannabis ancillary market.
Conclusion
Undervalued cannabis stocks present attractive investment opportunities in a sector poised for significant growth. By considering stocks such as WM Technology (MAPS), Scotts Miracle-Gro (SMG), and Philip Morris International (PM), investors can potentially capitalize on the expanding cannabis market. However, before making investment decisions, thorough analysis of market trends, company reputation, legal and regulatory environments, and competition is essential. Taking these factors into account will help investors make informed choices and maximize their potential returns.
