Investing In AeroGrow’s Gourmet Herb Gardens

The had a very interesting article on a company called AeroGrow that makes Kitchen Crop Appliances, based on a technology invented by NASA called aeroponics. In aeroponics, plants grow at an accelerated speed because nutrients are sprinkled directly onto their roots, which dangle in the air instead of being planted in soil.

According to the Economist, these systems have been widely used by commercial pot growers but this is the first time it is being adapted from home use to grow tomatoes, lettuce and herbs.

AeroGrow’s Aeroponic AeroGarden Herb Garden KitI checked out AeroGrow’s Herb Garden on Amazon. For around $150 you get a really neat little garden. The picture doesn’t actually do it justice. Check out the AeroGarden Video. The kit allows you to grow herbs superfast all year round. Quite a phenomenal product!

The Economist article mentions that the company has spent 4 years developing this product. It’s almost idiot-proof and they claim a 99.9% success rate for the herbs, which is pretty spectacular considering I’ve killed mint, which is a pretty hardy weed and tough to get rid of. There are also sites that have “sprung up” detailing how to modify to for a different type of weed too. While the company doesn’t endorse that usage, they do have a pretty nice range of salads, herbs and even roses.

The first thing that came to mind was whether I could make any money of this idea. The stock price of AeroGrow [AERO] has plummeted from around $9 in October 2007 to about $3.30 today. That’s a pretty steep 65% drop in less than 6 months. However at this price the company is trading for just over 1 times sales, which seems pretty low for a small cap growth company, and a forward PE of 15. It also looks like the insiders are nibbling at the shares too. The CEO, Bissonette, thinks aeroponics will become a $1.5 Billion industry. So far in the last quarter of 2007, AeroGrow had $14 million in sales ( a 300% increase from the year before) and is close to profitability. Definitely seems worth looking into.

Maybe it’s time to invest in this stock? Or instead I should put my money where my mouth is and buy an actual AeroGarden Kit! What would you guys choose?