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GrowGeneration (GRWG) Expands in Washington With New Buyout

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GrowGeneration Corp. (GRWG - Free Report) recently announced the acquisition of Washington-based Hoagtech Hydroponics. This deal, which marks the company's 13th acquisition this year, has taken its store tally to 59.

Founded in 2010, Hoagtech Hydroponics is a leading hydroponic equipment and indoor gardening store and operates out of its 25,000 square-foot warehouse in Bellingham. Following the buyout, its founder Dan Hoag, and his team of eight cultivation experts will join GrowGeneration.

This latest acquisition will aid GrowGeneration expand its footprint in the Pacific Northwest. It brings the company closer to some of the state's largest commercial operators. Bellingham is located near two major Pacific Northwest cites, Vancouver, British Columbia and Seattle, WA. With the addition of Hoagtech Hydroponics, the company expects the Washington market to generate annual revenues of around $15 million.

GrowGeneration recently reported record second-quarter 2021 revenues of $126 million, reflecting a whopping year-over-year growth of 190%.  Earnings per share was 11 cents, which marked an improvement of 83% from the prior-year quarter. The company’s continued focus on rapid, strategic growth in key markets both organically and through acquisitions, and efforts to reduce operational costs have aided results.

The company has been active on the acquisition front — making eight buyouts in 2020 and 13 so far this year. In July 2021, the company entered into an asset purchase agreement to acquire HGS Hydro, the nation's third largest chain of hydroponic garden centers. The company is well on track to meet its target of 70 locations by this year-end. It plans to have over a 100 locations by 2023.

Its revenue guidance for 2021 is at $455-$475 million. The mid-point of the guidance range indicates a surge of 141% from revenues of $193 million reported in 2020. Full-year adjusted EBITDA guidance is in the range of $54 million to $58 million.

GrowGeneration has been gaining from ongoing strength in sales on all fronts — online, commercial and retail. Private label expansion is strategic priority for GrowGeneration, and a key component of its long-term revenue generation plan. The company is focusing on growing private brands and private label offerings that carry attractive gross margins. The U.S Hydroponics market is expected to witness significant growth. Hydroponics have been a staple in cannabis cultivation. As more and more states across the country continue to legalize cannabis, the company’s products are much in demand.

Share Price Performance

Over the past year, GrowGeneration has soared 108.2% compared with the industry’s rally of 51.4%.

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Zacks Rank & Stocks to Consider

GrowGeneration currently carries a Zacks Rank #3 (Hold).

Some better-ranked stocks in the basic materials space include Avient Corporation (AVNT - Free Report) , Dow Inc. (DOW - Free Report) and Nucor Corporation (NUE - Free Report)   All of these stocks flaunt a Zacks Rank #1 (Strong Buy) currently. You can see the complete list of today’s Zacks #1 Rank stocks here.

Avient has a projected earnings growth rate of 75% for 2021. The company’s shares have soared 85% in the past year.

Dow has an estimated earnings growth rate of 261.6% for the current fiscal year. The company’s shares have gained roughly 36% in a year’s time.

Nucor has an expected earnings growth rate of 489% for the current fiscal year. The company’s shares have rallied around 163% over the past year.

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