The cannabis industry is on the cusp of a potentially major shakeup, as the U.S. Drug Enforcement Administration (DEA) considers a recommendation to reschedule marijuana from a Schedule I drug to the less restrictive Schedule III. This would be a regulatory boon for companies in the business of cannabis, which is already projected for substantial growth; Grand View Research is forecasting a CAGR of 25.5% for the global legal cannabis market through 2030.
Against this backdrop, here's a look at one small-cap cannabis stock that's priced at less than $3 per share right now, and potentially primed for major upside based on analysts' forecasts.
Insiders Scoop Up GrowGeneration Stock
GrowGeneration Corp (GRWG) runs a chain of specialty hydroponic and organic gardening shops across the U.S. Valued at $150.8 million by market cap, GRWG is a member of the Russell 2000 Index (RUT), which tracks a lineup of small-cap companies.
GRWG is down 44.8% over the past 52 weeks, underperforming the broader market. However, the stock has moved off its November lows below $2.
For what it's worth, company insiders thought GrowGeneration shares were a bargain around last year's lows, with both the President and CEO buying stock worth nearly $1 million each at an average price between $2 and $2.28. Generally speaking, insiders tend to buy shares only when they think the price will rise.
GrowGeneration last reported quarterly earnings on Nov. 8. The company reported a wider-than-forecast loss of $0.12 per share for the quarter, although revenue of $55.68 million came in above analysts' expectations of $54.97 million.
What's the Forecast for GrowGeneration Stock?
Looking ahead, analysts expect GRWG's losses to narrow from $0.44 per share in fiscal 2023 to $0.34 per share in fiscal 2024.
Ahead of an upcoming industry conference, GrowGeneration just hiked its own revenue guidance, noting that total sales for 2023 will land at the higher end of its previous $220-225 million estimate. The company backed its prior adjusted EBITDA guidance for a loss of $4 million to $6 million.
Out of the 6 analysts tracking GRWG, 4 analysts call it a “strong buy,” while 2 analysts are less enthusiastic with a “hold” rating. The average price target from this group is an ambitious $4.48. Based on current prices, that implies expected upside of more than 81% for GRWG.
