Is Buying GrowGeneration Stock a Bad Idea?

Marijuana sales in the U.S. have been booming in 2020. Thirty-three states and the District of Columbia have legalized medical marijuana and a flood of consumers have consistently bought cannabis products in the midst of lockdowns and quarantine measures. States including Colorado and California saw record cannabis sales in June and July, and expect revenues to continue growing. Amid the excitement, pot growers and distributors have received most industry and investor attention, while companies in the ancillary component of the marijuana ecosystem seldom hit the news -- until now.

GrowGeneration (NASDAQ: GRWG) plays a vital role in supporting the cannabis industry but does not actually develop the plants from which products are derived. The company instead provides LED lights, nutrients, additives, soils, and other products that assist with plant growth. The business seems set up to succeed in a U.S. cannabis market with a compound annual growth rate (CAGR) of 14% that is expected to be worth $30 billion by 2025, according to a report from New Frontier Data. But GrowGeneration's superb financial results have recently come under attack from a short-seller, sending its stock into a dive. Is the company a good pick for investors?

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Source Fool.com