Consumables Idea Hunt (SOVO, CELH, HLN, WEN, BOWL,TOST)
We are on the hunt for longs and shorts where our estimates differ materially from consensus expectations and where the multiple could be re-rated. We will present our analysis after a further round of vetting on a handful of companies. Our best ideas often are sourced from vetted Idea Hunt companies.
The topics we will cover include:
- How to be positioned in Restaurants and Consumer Staples in Quad 4.
- Will the food scare have a lasting impact on Wendy's (WEN)?
- Can Toast (TOST) take more share as restaurants look to drive sales and automate functions? Can the stock perform in a tech meltdown?
- How long can Bowlero (BOWL) create value through bowling center acquisitions?
- Is Celsius Holdings (CELH) a disrupter in the $60B energy drinks category? How long can it continue to add $300M in revenue annually?
- Haleon's (HLN) shares have stumbled out of the gate, does that represent an opportunity to invest in the spin-off?
- Can Sovos Brands (SOVO) continue to create value by plugging acquisitions into its playbook or should the strategy adjust?
Our Idea Hunt will be held today at 12:30 PM ET.
Oat milk startup (OTLY, STKL)
Oatside, a Singapore-based oatmilk company announced a $65.5M Series A funding round. The company will use the proceeds to expand production across the Asia-Pacific region. The company was founded in 2020 to sell an oatmilk designed for consumers’ palates in Asia. The product has a creamier and richer texture which is familiar to consumers who grew up in Asia drinking Ovaltine and Milo. Oatside’s founder and CEO Benedict Lim, was the former CFO of Heinz Indonesia. Oatside’s goal is to achieve price parity with dairy milk with greater scale in five years. Oatly competes globally, which is why the company cited a global dairy market in the retail channel alone of $600B. SunOpta on the other hand effectively only competes in the U.S. currently. The dairy milk culture is different globally and Asians have a much higher prevalence of lactose intolerance than Europe. One type of oatmilk does not necessarily translate globally.
California avocado harvest (CVGW, AVO)
California avocado growers enjoyed six months of record pricing this year. Production in California reached 275 million pounds, up from 260 million pounds in 2021. The harvest in California started and ended early, compensating the market for a light harvest in Mexico. Farmers in California were able to pick their crop before the hottest summer temperatures. “In 2022, however, the stars aligned with ideal market conditions and mild weather conditions. Our growers had a phenomenal year,” said the California Field Manager for Index Fresh, a global marketer of avocados. Mission Produce reported that Mexican volumes declined over 40% in FQ3. Guatemala made another step in the process to open the U.S. market for its Haas avocados. Consistent supply and lower prices is the preferred environment for Mission Produce and Calavo Growers.
