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CLICK HERE for the webcast and materials at the time of the event. |
SunOpta (STKL) and Grocery Outlet (GO) are both on our long list. Both companies' share prices have underperformed this year with SunOpta down nearly 40% and Grocery Outlet down nearly 30%. We will review what happened during the course of the year, what went wrong, and what went right. 2021 was still largely driven by macro factors for the consumer staples sector, with more elements out of the control of management than what they can really be held accountable for. We will also hold ourselves accountable and assess what is thesis creep or what part of the investment thesis remains the same.
More importantly, we will look out to 2022 and project what could go better or worse for 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 did 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.
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.
