GrowGeneration Corp (OTCMKTS: GRWG) is showing signs of bottoming out after a sharp sell-off last year. A bounce back from one-year lows has received a boost on the company carrying out a string of acquisitions that appear to have triggered renewed investor interest.
GRWG Share Price Analysis
The opening of a new cannabis production facility is another development that continues to strengthen the stock’s sentiments among investors. After a recent minor correction, the upward momentum appears to have picked pace exposing the stock to a critical resistance level.
A rally followed by a close above the $3.50 level is what is needed to affirm the emerging uptrend and attract bulls that have been on the fence. Above the critical resistance level, the stock would remain well positioned to make a run for the $5 level, which happens to be the next resistance level.
Above $5 mark, the stock would have turned bullish paving the way for bulls to push the stock to 52-week highs. In the meantime, GrowGeneration remains susceptible to further drops as it continues to trade below the critical $3.50 mark.
A violation of the $2.70 support level, could give short sellers a reason to continue pushing the stock lower as part of the bear trend.
What Does GrowGeneration Do?
Grow Generation is a cannabis-focused company that operates retail hydroponic and organic gardening stores. The company’s mission is to operate branded stores in all major legalized cannabis states across the U.S. The company is targeting the hydroponic market, expected to be worth $23 billion by 2020.
GrowGeneration Breakout Prospects
Grow Generation has tremendous potential to break out from one-year lows after succumbing to short selling pressure last year. Given that the overall cannabis sector has turned bullish, the odds are in favor of a bounce back.
A rapid acquisition drive is one of the catalysts likely to fuel a spike of the stock from one-year lows. Over the past few months, the company has completed a number of strategic acquisitions that once again affirm the company’s push for organic growth.
In February, the company acquired assets of Reno Hydroponics, bringing to two the number of hydroponic locations it operates in Nevada. Reno is an established leader in the hydroponic market set to strengthen the company’s push for market share in the sector.
“As a recreational legal market, Reno is a prime area for GrowGen, with an increasing number of dispensaries and cultivators. We continue to enter markets, where the cultivation laws are conducive to growing, and where GrowGen can strategically locate its operations, in areas where there are a high concentration of growers. Our growth plan is working,” said Darren Lampert, Co-Founder, and CEO.
Earlier in the month, the company had also completed the acquisition of assets belonging to BWGS, LLC and conversely gained access to a number of branded products. The acquisition is a big coup given that BWGS is a wholesale distributor with a variety of products; key among them being hydroponics, grow lighting among other tools.
The acquisition should strengthen GrowGen ability to supply an array of branded house products. The company also gains access to an array of private label products that it can rely on, to target a wider target audience.
In January, the company expanded its footprint in Colorado with the acquisition of assets belonging to Chlorophyll Inc. The superstore that the company acquired comes with over 20,000 sq. Ft. worth of warehouse and retail space. In addition, it is poised to add $8 million in revenue to GrowGen according to the CEO.
In addition to acquisition, the company strengthened its cultivation capacity, late last year, with the opening of a 10,000 square facility in Maine. The new facility is to serve as a cultivation equipment warehouse and a product showroom.
“Adding Chlorophyll, located directly in a strategic location with high visibility in Denver, CO., adds one of the largest and highest volume hydroponic stores in the country,” said Mr. Lampert.
The acquisitions that GrowGen has carried out so far, points to a bright future as the company eyes a piece of the multi-billion-dollar hydroponics market. The acquisitions are poised to fuel the next phase of growth, something that should excite investors and trigger a rally from current lows.
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Disclosure: We have no position in GRWG and have not been compensated for this article.