Hostess (TWNK) is a sleeping giant.
Here’s why I link $TWNK
– $2B Market Cap, $1B Revenue. Trading at 2X Revenue
– Currently trading at 20X Earnings, Tootsie Roll trades at 40X and other peers in the Food&Bev Trade at 30X. Making TWNK underpriced between 50% – 100%, looking at their current business only
– Their organic growth remains strong and also have a very diverse acquisition pipeline. They recently acquire Voortman Cookies which positions them to enter the USA $6.9Billion Packaged Cookie Markets.
– Voortman cookies are perfectly positions for the demographic and taste shifts happening in America right they. They offer sugar-free and no-sugar added cookies which will be a growing segment as a result of USA.
– They are launching new platforms in order to attract younger demographics such as their "crispy minis".
– Expansion into eCommerce onto platforms like Amazon. Given their shelf-stable products they are well positions to thrive on Amazon
– They have many legacy brands which is on-trend to capture recent popularity of Nostalgia Brands.
– Convenience & Boutique Grocery have recently hit all-time high market shares. This is important as the economy reopening people will be going to gas stations more, be out of their home more, giving them a great opportunity for continued growth. They are doing so well during the year of "stay-at-home" and "work-from-home" and has people get back to the office and back on the road this market share will perfectly suit them for growth.
CEO Andy Callahan was at Tyson Foods when stock went from $39 – $75 and he’s Former US Navy so he DEF. KNOWS about rocket ships.
They recently hired a very experience Head of Growth names Andy Callahan. Google him and you’ll see he is the perfect guy for the job
TL:DR: $TWNK has a short interest of 20%, is trading at 2x REVENUE with healthy 25% margins. They are well position for growth and I believe they are relatively undervalued. At a $2B market-cap this is an amazing deal and their portfolio of sweet treats and market share is perfectly primed to catapult this company.
Disclosure: I am long $TWNK via options and Stocks.
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June 11, 2021 at 08:31AM