Garden and landscaping suppliers became the not-so-unexpected winners of last month's election.
Marijuana legalization is a boon for these companies and because they don't deal directly with a federally banned substance, Donald Trump's victory didn't scare away investors.
Nine states voted on marijuana legalization on Nov. 8, with all voting in favor except for Arizona, which lost by a 4-percentage-point margin.
Marijuana is legal in some form in 28 states and legal for recreational use in nine of those states as well as Washington D.C. It is safe to assume that the trend will continue, increasing demand for the garden supply and landscaping equipment that these companies sell.
Here are three companies that stand to benefit in particular.
1. Deere (DE) - Get Report
Shares of agricultural equipment giant Deere are up nearly 33% this year at $102 apiece, with a dividend yield of 2.4%. Deere is a total return play and is the largest company in its peer group, second only to Caterpillar.
Deere has been upgraded by five major investment firms over the past three months, indicating that the company brings strong fundamentals into the growing marijuana industry.
Admittedly, sales to marijuana producers probably account for a small portion of Deere's $18 billion agriculture and turf equipment segment. But the company's sales in that segment could turn around from their three-year decline, thanks to growth in marijuana production.
Chief Executive James Hagedorn decided in 2013 that Scotts Miracle-Gro would bet on the growth of the legal marijuana business. The company is well-known for more than two dozen different brands, including the famous synthetic fertilizer Miracle-Gro and bad weed killer Roundup.
In an interview with ForbesHagedorn recalledtelling management, "We're doing it. It's beyond stopping."
Hagedorn wasn't talking about growing pot. He was talking about providing the supplies needed to do so including dirt, fertilizer, growing systems, hydroponic systems, lights, pesticides and everything in between.
Scotts Miracle-Gro then started making its biggest acquisitions since the 1990s. The company spent $135 million last year on two California businesses that sold fertilizers, soils and other supplies to pot growers.
Recently, the company bought an Amsterdam-based hydroponics equipment and lighting company, Gavita Holland, for $136 million. And the company's subsidiary, Hawthorne, recently signed an agreement to purchase an Arizona-based plant nutrient and hydroponic system maker, Botanicare.
3. Toro (TTC) - Get Report
This company specializes in enterprise scale turf maintenance, irrigation and landscaping systems. To give an idea of scale, Toro's products are used primarily for golf course and sports field maintenance as well as commercial and residential landscaping.
Toro's share price is up more than 47% this year to $54, and with the success of marijuana legalization last month, the company should continue to grow. Sporting a 1.1% dividend yield, Toro provides income investors with gains that are hard to beat.
Because Toro isn't investing heavily in acquiring new marijuana equipment makers like Scotts Miracle-Gro is, the company has less earnings risk should marijuana legalization encounter resistance from the incoming Trump administration.
As we've just explained, these three companies are excellent growth opportunities following the current trend of marijuana legalization. If you're looking for other growth opportunities, we've found a genius trader who turned $50,000 into $5 million by using his proprietary trading method. For a limited time, he's guaranteeing you $67,548 per year in profitable trades if you follow his simple step-by-step process. Click here now for details.
This article is commentary by an independent contributor. At the time of publication, the author held no positions in the stocks mentioned.