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A Must Read in March before Investing in Scotts Miracle-Gro

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Scotts Miracle-Gro

Scotts Miracle-Gro (SMG) has had an impressive market run lately. The company manufactures and markets products used to grow and maintain lawns and gardens. It’s also an exclusive distributor of Monsanto’s (MON) Roundup brand.

North America and Europe are two key markets for Scotts Miracle-Gro. In 2016, it generated 82.0% of its revenue from the US market alone.

To learn more about the company, read The Scotts Miracle-Gro Company: What’s Its Secret?

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SMG rallies in the second half of 2016

If you invested in Scotts Miracle-Gro five years ago, your investment has doubled as of March 7, 2017. Using the Rule of 72, a quick tool to determine how long it takes an investment to double, that would mean an annualized return of ~14.4%[1. 72 divided by 5, the number of years in which the investment doubled] in the past five years.[2. from March 7, 2012, to March 7, 2017]

In 2016 alone, SMG returned 50.0% in share appreciation to its investors, with most of the uptick coming in the second half of 2016. It also distributed dividends of $1.94 in 2016, which was a yield of about 2.5% and a total return of ~52.5%. But keep in mind that in 2017 YTD (year-to-date), SMG stock has fallen 4.7% to $90.10, its closing price on March 8, 2017.

SMG’s peer (PAGG) Seaboard (SEB) has fallen 13.2% YTD, and Central Garden & Pet (CENT) has risen 3.4%. Spectrum Brands Holdings (SPB) has risen 11.2% YTD.

Series overview

The rally in SMG stock sends an underlying message that investors may be seeing a bright spot in the company’s future. But what could that be for a company that has been in existence for more than a century? In this series, we’ll try to answer that question. We’ll also see how the Trump administration’s policies and regulations could impact the company.

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