What happened
GrowGeneration (GRWG -4.47%) shares had quite the growth spurt on Monday, closing the day 11.5% higher. The hydroponics retail store operator got a pop from its inclusion on a major stock index.
So what
That index is the Russell 2000, a prestigious and influential collection of small-cap stocks. Monday morning, GrowGeneration officially became one of its components.
"We believe our Russell 2000 listing will increase long-term shareholder value by improving awareness, liquidity and appeal to institutional investors," the company quoted its CEO Darren Lampert as saying.
Image source: Getty Images.
It won't, however, change GrowGeneration's business strategy of amassing considerable market share largely through acquisitions. Lampert was also quoted as saying that his company "continues to focus on expanding the number of our hydroponic garden centers, while increasing revenue and net profit."
GrowGeneration has been doing well with this strategy of late. In its most recently reported quarter, fueled by both organic growth and acquisitions, the company managed to catapult its revenue 173% higher year over year. And, in an all-too-rare feat for a company associated with the marijuana industry, on a GAAP basis it earned a profit (of $6.1 million, to be exact).
Now what
That profitability, modest as it was, sets GrowGeneration apart from the cannabis stocks it's usually lumped in with, and Russell 2000 inclusion will further distinguish the company. GrowGeneration is well on track to become a kingpin in the hydroponics industry, and as such should continue to be a favorite picks-and-shovels play for marijuana stock investors.
