Are you looking to grow your account like a lawn, steadily and reliably? Not every stock has to be a quick gainer, and investors in Scotts Miracle-Gro (NYSE:SMG) might find that SMG stock offers a level of consistency that long-term yield hunters crave.
This isn’t to suggest that the stock isn’t capable of market-beating gains. 2020 was actually a banner year for loyal shareholders who held SMG through the onset of the novel coronavirus pandemic.
As we’ll see, Scotts Miracle-Gro not only survived the pandemic — the company’s business actually thrived due to changing consumer trends in 2020.
And as the fiscal data will show, Scotts Miracle-Gro remains a company in growth mode. So, get ready to plant some seeds as SMG stock’s upward trajectory is, most likely, just getting started.
SMG Stock at a Glance
Folks who’ve held Scotts Miracle-Gro shares for a while are accustomed to having their patience tested. For instance, 2018 was a challenging year as SMG declined from over $100 to the $65 area.
Even more difficult was the pandemic-induced SMG share-price crash of March 2020. Without a doubt, it was gut-wrenching to witness SMG stock fall from $125 to $77 in a matter of weeks.
However, holding the stock through the tough times eventually yielded substantial rewards. By Feb. 5, 2021, Scotts Miracle-Gro surpassed $230 and it has showed no signs of slowing down.
Yet, even with those price gains, SMG stock had a trailing 12-month price-to-earnings ratio of around 28x. This suggests that the stock is still a good value and could run much farther before it’s overextended.
The next price targets for the bulls should be $250 by mid-year and $300 by the end of 2021. Given SMG stock’s trajectory, these are entirely achievable.
Lockdown Lawn Care
Scotts Miracle-Gro has basically admitted that the company benefited from changed consumer behavior during the Covid-19-induced lockdowns.
According to Scotts Miracle-Gro, Americans showed an increased focus on lawn and garden care as they were locked down at home during the Covid-19 pandemic.
Furthermore, SMG estimates that upwards of 25 million new consumers purchased products within the lawn-and-garden category during the past year.
Josh Peoples, chief marketing officer at Scotts Miracle-Gro, emphasized “the unparalleled passion and enthusiasm we’re seeing around lawn and garden care, particularly among new Millennial homeowners.”
That’s a huge market to leverage as Millennials collectively control huge amounts of capital nowadays.
Scotts Miracle-Gro Vice President of Advertising John Sass is evidently glad to leverage this market demographic. Sass is eager to meet these young consumers “where they are, from TikTok to Instagram to the Super Bowl.”
Marking a Milestone
Informed investors might want to see some numbers to back up the thesis that SMG stock will continue climbing.
Fair enough, so here’s a data point for you. During 2020’s fourth quarter, Scotts Miracle-Gro’s company wide sales increased by a whopping 79% to $890.3 million.
This is even more significant for Scotts Miracle-Gro than you might think. The fourth quarter has, in recent history, been marked by seasonal loss for Scotts Miracle-Gro.
It has generally been a pattern that long-term investors have simply come to accept. But now, the fourth quarter of 2020 marks the company’s first profitable fourth quarter in 14 years.
If you need more numeric data, check this out. For the fourth quarter of 2020, Scotts Miracle-Gro posted earnings of 39 cents per share (adjusted for non-recurring items).
That’s a vast improvement compared to the loss of $1.12 per share during the year-ago quarter. Clearly, Scotts Miracle-Gro is capable of remaining a strong market performer and delivering strong shareholder value.
The onset of a pandemic didn’t prevent Scotts Miracle-Gro from leveraging shifting consumer preferences. If anything, the company managed to thrive during a difficult 2020.
Today, SMG shares are moving up quickly but still isn’t overvalued. With that in mind, you’re invited to add a touch of green to your portfolio with SMG stock.
On the date of publication, neither Louis Navellier nor the InvestorPlace Research Staff member primarily responsible for this article held (either directly or indirectly) any positions in the securities mentioned in this article.
Louis Navellier had an unconventional start, as a grad student who accidentally built a market-beating stock system — with returns rivaling even Warren Buffett. In his latest feat, Louis discovered the “Master Key” to profiting from the biggest tech revolution of this (or any) generation. Louis Navellier may hold some of the aforementioned securities in one or more of his newsletters.