Something happens every March that no amount of marketing budget could replicate. The temperature nudges up a few degrees, the days stretch a little longer, and people who haven’t thought about their yards in months suddenly have a list of things they want to do outside. Garden centers know it’s coming. So do the companies that supply them.
Spring is the season that makes or breaks the year for a lot of businesses in the lawn and garden space. The rush isn’t just avid gardeners stocking up on seeds and soil…it’s new homeowners trying to make a yard feel like their own, people refreshing patios they’ve been ignoring, neighbors quietly competing on curb appeal. The range of customers driving that demand is wider than it looks from the outside.
What makes the category interesting from an investment standpoint is how far the spending ripples out. It includes fertilizer, mulch, tools, outdoor equipment and planting supplies among other things. It moves through a supply chain full of companies that are well-positioned in normal years and very well-positioned in active ones.
In this issue, we’re highlighting two companies that stand to benefit as spring projects get underway and homeowners start spending on the outdoors again.
The Scotts Miracle-Gro Company (NYSE: SMG)
The Scotts Miracle-Gro Company (NYSE: SMG) is a leading developer, manufacturer and distributor of consumer lawn and garden products. The firm serves both retail and professional customers through an array of branded offerings that include lawn fertilizers, grass seed, pest and disease control solutions, plant foods and specialty products for indoor and outdoor gardening.
As lawn and garden activity ramps up while the weather gets warmer, the prospects for Scotts Miracle-Gro greatly improve. That’s because this is when the growing season begins, homeowners start preparing their yards by reseeding lawns, fertilizing soil, and planting flowers and vegetables. That seasonal shift often drives a noticeable increase in demand for the products Scotts Miracle-Gro produces.
The company’s portfolio includes several widely recognized brands that gardeners and homeowners return to year after year. When people head to garden centers or home improvement stores for supplies, fertilizers, plant foods, and pest-control products are often among the first items in their carts.
Because many of these purchases happen during a relatively concentrated window in the spring months, the start of the gardening season can be an important period for sales. As more homeowners spend time improving outdoor spaces, companies supplying the tools and materials behind those projects often see demand pick up alongside the warmer weather.
According to the 8 analysts’ twelve-month price targets for SMG, the average price target is $72.50, which represents a forecasted upside of 18.89% from the current share price.
Lowe’s Companies, Inc. (NYSE: LOW)
Lowe’s Companies, Inc. (NYSE: LOW) is one of the largest chains of home improvement stores in the United States and the second-largest hardware chain in the world.
Walk into a Lowe’s in April and the store has a different feel than it did in February. The garden center is the first thing you notice, as it’s packed with flats of flowers, bags of mulch stacked head-high, and customers who clearly came in for one thing and are leaving with a cart full of four others. Spring doesn’t sneak up on Lowe’s. The company plans for it all year.
That preparation shows up in how the store is set up when the season hits. Lawn and garden moves to the front. Inventory on high-turnover items such as fertilizer, soil and edging materials gets expanded before demand peaks rather than after. The promotional calendar is built around the homeowner who just decided this is the weekend they’re finally doing something about the backyard.
What keeps the demand picture interesting is the mix of customers driving it. DIY homeowners account for a lot of the spring volume, but professional landscapers and contractors are a meaningful piece of the business too…and Lowe’s has been investing in that side deliberately, with jobsite delivery and services built around keeping pros from defaulting to a competitor. Private-label products give cost-conscious shoppers a reason to stay in the store rather than shop around on price.
The result is a business that enters the spring season with demand coming from more than one direction, which tends to make the numbers more resilient when any single part of the customer base gets unpredictable.
According to the 30 analysts covering the company’s stock, the average twelve-month price target for LOW shares is $289.76 This represents a forecasted upside of 21.92% from the current share price.
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