Introducing Coverage at Gradually Accumulate
- Scotts Miracle-Gro, the #1 provider of branded consumer lawn and garden products, is a market leader and one of only a few publicly-traded companies to participate in the emerging cannabis industry, which may have significant growth potential.
- Organic growth is poised to accelerate to 3%-to-5% annually through a focus on new growth areas such as hydroponics (including cannabis) and live plants.
- Operating margins should increase to 16.3% in FY18 (from an estimated 15.6% in FY17 and 14.8% in FY16) from operational improvements, including divesting lower margin businesses.
- With the pending sale of the European business, over 95% of sales and profits will come from the U.S., and thus, SMG is a major beneficiary of proposed tax reform with a 35.5% current rate.
- Despite a market cap of over $5 billion, SMG is covered by only eight other analysts, offering discovery potential and thus P/E expansion.
Scotts Miracle-Gro is a manufacturer and marketer of consumer lawn and garden products in North America. The company's segments are: United States Consumer, which consists of the company's consumer lawn and garden business located in United States; Hawthorne, which consists of the company's indoor, urban and hydroponic gardening business; and Other, which consists of the company's consumer lawn and garden business in geographies other than the United States and the company's product sales to nurseries, greenhouses and other customers. The company manufactures, markets and sells lawn and garden products in the following categories: lawn care, gardening and landscape, hydroponics, and controls.
Great Lakes Review is located in Cleveland, Ohio, was founded in 1981 and became a division of Wellington Shields & Co. LLC in 2011. Great Lakes Review is a research boutique focused on the fundamentally-oriented investor seeking companies that dominate their respective specialty niche regardless of industry. The objective is to make money for the long-term by gradually accumulating a diversified portfolio from a universe of no more than 30 companies. Although short-term-oriented accounts will be alerted to trading opportunities, aggressive sell recommendations are triggered only by a deterioration in long-term fundamentals, not by short-term blips or investor fancy. Coverage of those names that lose their earnings momentum or earnings predictability may be dropped and replaced with more vital candidates.
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