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Why You Should Add Scotts Miracle-Gro (SMG) to Your Portfolio

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The Scotts Miracle-Gro Company (SMG - Free Report) stock looks promising at the moment. The company’s shares have rallied more than 57% year to date.

We are positive regarding the company’s prospects and believe that the time is right to add the stock to your portfolio. The stock looks promising and is poised to carry the momentum ahead.

Let's see what makes this stock a suitable investment option at the moment.

An Outperformer

Scotts Miracle-Gro has significantly outperformed the industry it belongs to in the past year. The company’s shares have surged 64.1% against 8.4% decline of the industry. The company also outpaced the S&P 500’s rise of 17.7% over the same time frame.

Upbeat View

In September, the company revised its outlook for fiscal 2020.

The company expects net sales and adjusted earnings per share (EPS) to surpass its prior guidance issued in July. For fiscal 2020 (ending Sep 30, 2020), the company now projects adjusted EPS to be around $7.25 compared with previous guidance of $6.65-$6.85. This is likely to be driven by company-wide sales growth of more than 30%.

Per Scotts Miracle-Gro, the momentum in the U.S. Consumer and Hawthorne segments is exceeding the company’s expectations. Its key business drivers, in the past six months, have been highly engaged retailer support and strong consumer demand. The company expects the trend to continue into first-quarter fiscal 2021. Further, it expects lower expenses to act as tailwind next year.

Positive Estimate Revisions

Earnings estimate revisions have the greatest impact on stock prices. The Zacks Consensus Estimate for Scotts Miracle-Gro’s for fiscal 2020 moved up 6.5% in the past month.

Earnings Growth

The consensus estimate for Scotts Miracle-Gro’s fiscal 2020 earnings is currently pegged at $7.26 per share, which suggests year-over-year growth of 62.4%.

Zacks Rank & Other Key Picks

Scotts Miracle-Gro currently carries a Zacks Rank #2 (Buy).

Some other top-ranked stocks in the basic materials space are Brenntag AG (BNTGY - Free Report) , Comstock Mining, Inc. (LODE - Free Report) and Equinox Gold Corp. (EQX - Free Report) , each carrying a Zacks Rank #2. You can see the complete list of today’s Zacks #1 (Strong Buy) Rank stocks here.

Brenntag has an expected earnings growth rate of 2.9% for 2020. The company’s shares have surged 35.3% in the past year.

Comstock Mining has an expected earnings growth rate of 370% for 2020. Its shares have returned 140.5% in the past year.

Equinox has an expected earnings growth rate of 137.9% for 2020. The company’s shares have gained 127.1% in the past year.

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