The Scotts Miracle-Gro Company (SMG)

I want to shoot SMG with an SMG.

Maneaty days BUY

GOOD STOCK

Saturated market, low dividend, high P/E relative to market (even with realistically non-zero earnings estimates), bad trend on revenues and earnings, heavily dependent on household and residential sector...

In short, this stock is uncompetitive compared to the market of all available places to put your money. It doesn't matter if they are a leader in their sector.

Give me spots on my apples but leave me the birds and the bees.

good products

Scott's looks anemic, and far too overpriced at -10% in 52-weeks. This is an insanely high price.

There are several fundamental issues facing this company that have the "glass is half full" crowd pushing SMG up close to 50% from its lows. For example, investors ran the company's stock up more than 10% when an announcement was made in November regarding SMG's plan to offer a private label alternative. Granted, this move will likely take market share from SMG's competitors, but it may well also take share from it's own high margin premier product. The company claims that it will successfully raise prices in 2009 even as it sees a drop in sales with a net positive impact. The company also is significantly leveraged, but says it should remain in compliance with its loan covenants. While commodity prices have come down, the company acknowledges that it hedged a material amount of it's 2009 commodity costs at prices well above today's spot prices.

The glass half full community looks ahead to lower commodity costs for SMG, higher prices for its branded product, and improvement in production utilization through the introduction of private label production.

When all is said and done, SMG, while excelling in name brand respect and recognition, is in a cyclical business that faces numerous obstacles. Aside from its current problems with government regulators, a dismal economy, and possible shifts in sentiment in drought prone states such as California, where water use versus lawn care issues may cause sales erosion in many of SMG's products I wouldn't be surprised to see the company's borrowing costs on the rise. At current prices, I believe SMG is significantly over valued.

Echoing COOLSTOCK,
"a lawn and garden company".

NOVEMBER IBD 1 OF 3

Victory gardens etc etc.

Bumping resistance. Short the pop.

As prices of raw materials for just about all their products increases (fertilizer, grass seed, etc.) customers will begin (or should I say already have) to search for cheaper alternatives (which are readily available at just about every outlet) In addition as raw materials increase Scotts will attempt to lower the margins that retailers make selling their products which make those retailers look for cheaper alternatives with better margins. It's a lose/lose scenario that is destined to chew into their bottom line both now and in the future. Look for huge earnings misses in 1st/2nd quarters of 2009 and possibly the 4th quarter of 2008

Short term trade on oversold quality and outlook (I think people will stay home more due to the FUD and gardening demand will at least hold steady.

With people paying so much for groceries, I have to believe that the demand for growing your own at a lower cost will be appealing to consumers. With many Americans spending more time at home, the idea of adding a few plants or flower boxes to brighten up the place makes sense. I think this stock has been sold to the point of being overdone. Probably won't bounce until after the next earnings release, but I think there is more upside potential than downside -- especially at this price.

Long term play. Several fantastic brand names: Ortho, Roundup, Scotts, and Miracle-gro. 60% off of its 5-year high.

People love to garden and are running scared due to recession talk. So everyone is planting a garden, thus Miracle Grow Steps.

This stock was picked by TMFAndyOS1 in the 2008 TMF Stockpicking Contest.

Weekly & Daily Stochastics oversold