Can you make $ with a Salad bar?
Sweetgreen (SG) priced its IPO at $28 per share, well above the expected range of $23-$25, valuing the company at nearly $3.528 Billion. The company is unprofitable and will not turn a profit for the next five years, and is now trading at 7.1x 2023 EV/Sales ($443 Million). I hope this stock goes significantly higher over the next few days! I don't think this stock is worth much more than $15.
Research Roundup
We are hosting a Research Roundup today at 2 PM ET. We will revisit our investment thesis for SunOpta and Grocery Outlet. SunOpta (STKL) and Grocery Outlet (GO) are both on our long list. Both company's share prices have underperformed this year, with SunOpta down nearly 40% and Grocery Outlet down nearly 30%. We will review what happened during the year, what went wrong, and what went right. 2021 was still primarily driven by macro factors for the consumer staples sector, with more elements out of the control of management than what they can be held accountable for. We will also hold ourselves accountable and assess what thesis creep is or what part of the investment thesis remains the same.
More importantly, we will look out to 2022 and project what could improve or worsen the companies. We will examine the headwinds and tailwinds. Both companies are positioned to outperform in 2022 from a competitive as well macro perspective. The valuation of both companies also sets them up well to outperform when the headwinds subside.
Grocery Outlet is a grocery discounter that should have benefited from the shift to at-home meal consumption but not in 2021. The company's Q3 results show the light at the end of the COVID tunnel. Grocery Outlet remains one of the consumer sector's best square footage growth concepts in the digital era. We are raising Grocery Outlet one spot higher on our long list.
SunOpta is one of the largest suppliers of plant-based beverages, one of the best secular growth categories in how we will consume in the future. The company should have benefited from the growth of plant-based foods and the high-profile IPO of Oatly, a competitor, but the opposite happened. SunOpta's topline and margin visibility is not reflected in the current valuation.
NEW LOW for JUST EAT
Just Eat Takeaway is a LONG
Just Eat Takeawy.com hit lows of the day, down over 2%, amid comments from the CEO that he has no plans to sell Grubhub. Cat Rock Capital is calling for the company to spin off 40% to 100% of Grubhub and wants the food delivery company to announce such a spin by year-end if it can't reach terms on the sale of the business before then. Just Eat Takeaway said that it expects Grubhub will eventually be part of a consolidation in the U.S. delivery market but did not indicate any deal is in the works.
