GRWG Stock & PLNHF Stock: Two of the Biggest Pot Winners in 2020

Can GrowGeneration Corp & Planet 13 Holdings Inc Repeat Their Successes in 2021?

At the start of  2020, I wrote a piece suggesting that GrowGeneration Corp (NASDAQ:GRWG) and Planet 13 Holdings Inc (CNSX:PLTH, OTCMKTS:PLNHF) were two pot stocks set to trounce the broader market.

They did just that. In fact, GrowGeneration stock was the best-performing marijuana stock in 2020, soaring 844%. Planet 13 stock also had a great year, advancing by a more modest 176%.

In contrast, the S&P 500 rallied approximately 14% in 2020. ETFMG Alternative Harvest ETF (NYSE:MJ), the world’s largest cannabis exchange-traded fund (ETF), ended the year down 9.8%, but it climbed 32% following the U.S. election.

Can GRWG stock and PLNHF stock repeat their strong performances in 2021?

It seems unlikely that GrowGeneration stock, which is currently trading at $46.30, will soar 844% in 2021. Still, GRWG stock has what it takes to be one of the bigger pot stock winners in 2021, and I think a 12-month price target of $60.00 is within reach. That suggests 30% upside from the current level.

On the other hand, Planet 13 stock could experience much larger gains in 2021 than it did in 2020. The company reported another quarter of record results. And in spite of COVID-19—which saw the company’s Las Vegas dispensary operate at 50% capacity—its revenue was 36% higher compared to pre-COVID-19 levels.

In 2021, Planet 13 Holdings Inc will open a new dispensary—the second-largest dispensary in the world—in Santa Ana, CA. The company’s Las Vegas “SuperStore” is the largest.

Currently trading at $5.98, a 12-month forecast of $12.00 is not out of the question for PLNHF stock. That would represent a one-year increase of approximately 100%.

GrowGeneration Corp

GrowGeneration stock might be the perfect pot stock for investors who don’t like the idea of directly investing in pot.

The Denver, CO-based company is the largest hydroponics supplier in the U.S., with 28 retail stores in 10 states (and plans to add more). The company also sells more than 10,000 hydroponics products on its web site. (Source: “Investor Presentation: October, 2020,” GrowGeneration Corp, last accessed January 6, 2021.)

In addition to selling to private growers, GrowGeneration also sells to large multi-state operators.

The company says its goal is to own and operate GrowGeneration-branded stores in all major U.S. states and Canada. One of the biggest drivers of growth for GrowGeneration is its aggressive acquisition strategy. In 2020, the company announced more than 10 strategic acquisitions.

Most recently, on December 23, GrowGeneration announced the acquisition of Southern California-based Canopy Crop Management and its portfolio of products, including the “Power SI” brand of fertilizers. (Source: “GrowGeneration Acquires Assets of Canopy Crop Management,” GrowGeneration Corp, December 23, 2020.)

GrowGeneration’s acquisitions have helped juice its revenue and earnings.

Chart courtesy of StockCharts.com

GrowGeneration’s Record Q3 2020 Results

In November, GrowGeneration announced that its revenue for the third quarter of 2020 increased 153% year-over-year, to a record $55.0 million. This represents the company’s 11th consecutive quarter of record revenues. (Source: “GrowGeneration Reports Record Third Quarter 2020 Financial Results,” GrowGeneration Corp., November 11, 2020.)

The company reported record quarterly net income of $3.3 million, or $0.07 per share, a 230% increase over the third-quarter 2019 net income of $1.0 million, or $0.03 per share.

Thanks to the strong results, GrowGeneration Corp increased its 2020 revenue guidance to $185.0–$190.0 million and its 2021 revenue guidance to $280.0–$300.0 million.

Planet 13 Holdings Inc

Planet 13 owns and operates the largest pot dispensary in the world. The company’s Las Vegas SuperStore, which is the closest marijuana dispensary to the heart of the Las Vegas Strip, covers 112,000 square feet. (Source: “About,” Planet 13 Holdings Inc, last accessed January 6, 2020.)

In November, the company officially re-opened its second dispensary in Las Vegas: “Medizin.” In the first half of 2021, it plans to open its second SuperStore, in Santa Ana.

Over the next five years, Planet 13 Holdings Inc hopes to open eight or more SuperStores in tier-one markets in the U.S. and Canada.

Chart courtesy of StockCharts.com

Planet 13’s Record Q3 2020 Results

In November 2020, Planet 13 announced that its revenue for the third quarter, which ended September 30, increased 36.5% year-over-year to a record $22.8 million. In the quarter, the company’s in-house brands contributed 25% to its SuperStore revenue. (Source: “Planet 13 Announces Record Third Quarter 2020 Financial Results,” Planet 13 Holdings Inc., November 24, 2020.)

The company reported third-quarter net income before taxes of $3.4 million, compared to 2019 third-quarter net income of $300,000. Planet 13 reported  comprehensive net income of $200,000, or breakeven per share, compared to a third-quarter 2019 net loss of $1.7 million, or a loss of $0.01 per share.

Planet 13 ended the third quarter with cash of $56.8 million, compared to $12.8 million in the same prior-year period. The company’s total assets were $125.5 million, compared to $62.9 million in the same prior-year period. Its total liabilities were $39.3 million, compared to $21.6 million in the same prior-year period.

Analyst Take

GrowGeneration Corp and Planet 13 Holdings Inc were two of the biggest winners in the cannabis sector in 2020, and this year could be equally rewarding.

In addition to the companies having strong operations and aggressive expansion plans, a cannabis-friendly political party will soon be in the White House. Not only that, a growing number of Republican voters also want to see pot decriminalized. All this bodes well for the cannabis industry in 2021.