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Scotts Miracle-Gro is a marijuana play, says JPMorgan

A file photo of marijuana plants
Gina Ferazzi | Los Angeles Times | Getty Images

Investors should buy Scotts Miracle-Gro because recent hydroponics business acquisitions will pay off as legal marijuana use increases, according to JPMorgan.

The firm raised its rating on the seed and fertilizer company to overweight from neutral.

Hydroponics is the process of growing plants in liquids without the use of soil and is a popular method for cultivating marijuana.

"We view Scotts as a reasonably valued investment over a longer time frame as weather impacts have understated Scotts' sales growth and Scotts' investment in its faster growing hydroponics portfolio should provide further upside," analyst Jeffrey Zekauskas wrote in a note to clients Thursday.

"The hydroponics market taps into marijuana demand and the company now has a growth option that we think an investor is able to capture for about the price of the traditional business."