Consumer Stock Winner: Scotts Miracle-Gro

Scotts Miracle-Gro stock is moving higher Wednesday, defying the broader equities markets, after reporting a spate of positive news for the company and its investors.
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NEW YORK (TheStreet) -- Scotts Miracle-Gro (SMG) - Get Report stock is moving higher Wednesday, defying the broader equities markets, after reporting a spate of positive news for the company and its investors.

Scotts Miracle-Gro stock has risen 1.1% to $47.93.

The mid-cap stock is still outpacing large-cap consumer staples such as

P&G

(PG) - Get Report

and

J&J

(JNJ) - Get Report

.

P&G

(PG) - Get Report

has fallen 0.6% to $60.44 and

J&J

(JNJ) - Get Report

is down by 1.5% to $58.53 as the broader equity markets linger in red territory.

Scotts ended the Tuesday sharply higher than large-cap consumer staples such as P&G and J&J, which ended the trading session in mixed territory after the Fed announced, as expected, that it would leave the target fed funds rate unchanged. The Fed's move reflects its desire to boost liquidity amid the slowing pace of economic recovery, according to industry analysts.

This week, Scotts Miracle-Gro reported

a spate of uplifting news

, including a rise in profit, a share repurchasing program and the doubling of its quarterly dividend.

Amid all this, BMO Capital Market analyst Connie Maneaty, who currently holds an outperform rating on Scotts Miracle-Gro stock, said in an investor note that the company is finding a sweet spot.

"Years of effort seems to be paying off in healthy flexibility. SMG's operations are now characterized by solid sales growth, a full new product pipeline, disciplined spending, capital spending that produces a healthy return, modest leverage and more efficient working capital management."

Maneaty said these elements helped Scotts Miracle-Gro generate sufficient cash flow to generate much of the positive news announced this week. Maneaty believes that the company's sales have not hit a peak yet and believes that the EZ Seed product -- which generated sales of $25 million in fiscal year 2009 and could produce $60 million to $70 million this year -- could develop into a product for seeding lawns instead of just patching them.

This EZ Seed transformation could further increase the product's sales potential, Maneaty noted. She added that over the next few years, new products that could come to market include the Snap cartridge system, new insecticides and pesticides and dehydrated soil that expands in the presence of water.

-- Reported by Andrea Tse in New York

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