With economic uncertainty ruling large portions of the landscape right now, it will come as no surprise that investors are looking for stocks that can ride out a recession. Word from Truist Securities, meanwhile, says that fertilizer giant Scotts Miracle-Gro (SMG) might be just the play to consider. Investors weighed in, and got on board, sending shares up over 4% in Wednesday afternoon’s trading.
Word from Truist analyst Bill Chappell, who has a three-star ranking on TipRanks, elevated Scotts stock from a Hold to a Buy, but left the price target at $70 per share. That suggests an upside potential of 28% over the Tuesday close. Basically, Chappell notes, there is no longer COVID-19 impact on the American lawn and garden market. Thus, earlier patterns about economic certainty figures can reassert themselves, and historically, Scotts Miracle-Gro does pretty well in bad economic times.
Why? The idea is fairly simple; people who are concerned about the economy do not tend to travel a lot or spend very much. But some lawn care products are comparatively inexpensive, and make homeowners feel better about their lot in life, as long as they are looking over a brilliant emerald lawn when they think about it.
Internal Cost Savings
There is a less-considered factor at play for Scotts as well, noted another report. Scotts has recently brought quite a bit of time, effort and resources into improving its use of software-as-a-service (SaaS) systems. Scotts, as it turns out, has a lot of paperwork going through its office. And it is putting OpenText Core Content Management, and OpenText Core Capture, to work in managing it.
The result was improved workflow and reduced costs, which will give its own bottom line a nudge even as more economically-gunshy shoppers shy away from buying stuff and put somewhat less cash into home improvements instead.
Is Chipotle a Buy, Sell or Hold?
Turning to Wall Street, analysts have a Moderate Buy consensus rating on SMG stock based on three Buys and two Holds assigned in the past three months, as indicated by the graphic below. After a 20.19% loss in its share price over the past year, the average SMG price target of $76.75 per share implies 34.65% upside potential.
