Is Aero Grow International, Inc. (OTCMKTS:AERO) Able To Reclaim Its Former Glory?
Years ago Aero Grow International, Inc. (OTCMKTS:AERO) was able to command revenues close to $40 million at their peak but the company crumbled under its own weight. Unable to support its retail chain and debt levels rising alarmingly the management was forced to switch to a direct-to-consumer business model. Thus due to the constricted exposure of their products revenues started shrinking never to return to the previous sums.
For the second quarter of their fiscal 2014 that ended September 30 AERO reported the following financial results:
- $2 million cash
- $3.8 million total current assets
- $2.2 million total current liabilities
- $676 thousand revenues
- $621 thousand net loss
Revenues once again took a hit and were down by 40% compared to the same period last year. But this time the reason behind it is actually quite positive. AERO stopped replenishing their inventory leaving many of their products out of stock for most of the quarter. This was done so that AERO can launch their products under the new brand of “Miracle-Gro AeroGarden” as part of the deal that largely brought the company back to life.
In April Scotts Miracle-Gro (NYSE: SMG) invested more than $4 million into AERO acquiring a 30% stake in the company. Now backed up by the full support of Scotts AERO has been able to re-enter the retail channel. They have been working with Amazon, Costco and have begun testing their gardens in Home Depot.
Investors have known all this for some time now so why did AERO‘s stock surge to a record for the past two years share price of $3.29 during yesterday’s session? That may have something to do with the ongoing massive hype-wave that is happening within the marijuana-based industry. Although for now AERO are not directly involved in the sector their indoor gardens can in fact be used to grow the plant. The CEO has said that they are keeping an eye on the regulatory and legal developments and may wait for the laws to become even less strict before entering the market.
At the current prices AERO is not easily accessible when compared to the numerous pure-play marijuana pennystocks. Still the 
company may offer less risks as their price has not been artificially inflated to disproportionate heights. For example the stock of Fusion Pharm, Inc. (OTCMKTS:FSPM) has surged from $0.45 to more than 2 dollars in the last 4 sessions. In early trading today they are up by 12% sitting at $2.33. And after adding 50% to its value yesterday Growlife Inc. (OTCBB:PHOT) is still flying high currently 32% higher trading for $0.46 per share.
company may offer less risks as their price has not been artificially inflated to disproportionate heights. For example the stock of Fusion Pharm, Inc. (OTCMKTS:FSPM) has surged from $0.45 to more than 2 dollars in the last 4 sessions. In early trading today they are up by 12% sitting at $2.33. And after adding 50% to its value yesterday Growlife Inc. (OTCBB:PHOT) is still flying high currently 32% higher trading for $0.46 per share.