We hosted an Idea Hunt call for Consumer Staples and Restaurant names earlier today. 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 presented our analysis after a further round of vetting on a handful of companies. Our best ideas often are sourced from vetted Idea Hunt companies.
As part of our Idea Hunt, we made the following changes to our position monitor:
- Real Good Foods (RGF) was added to our Long Bias list.
- Vita Coco (COCO) was added to our Long Bias list.
- Kura Sushi (KRUS) was added to our Short Bias list.
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CLICK HERE for the webcast replay and materials. |
CONSUMABLES FIRST TAKE:
- Clorox (CLX) is a consumer and professional products manufacturer of a myriad of goods from cleaning supplies to food wraps and a lot of items in between. Clorox was a big winner during the pandemic and a long sufferer of the hangover. The market expects the company’s return to growth imminently. How much price is too much? What are the company’s organic growth prospects? What is priced into the shares? We will jump into the debate.
- Cracker Barrel Old Country Store (CBRL), better known as just Cracker Barrel, is a restaurant/retailer that has a nationwide presence. The company has a $2.9 billion enterprise value and prides itself on providing "a caring and friendly home-away-from-home experience while offering guests high-quality homestyle food to enjoy in-store or to-go and unique shopping - all at a fair price."
- Real Good Foods (RGF) is a fast-growing, wellness-focused frozen food manufacturer. The brand is centered on high protein & low-carb – the future of healthy eating trends where organic growth trends are among the strongest. The company’s margins were under considerable pressure from input cost inflation in 2022. The combination of ingredient disinflation, price increases, and manufacturing efficiencies should see margins inflect in 2023. Real Good Foods is also an attractive asset to the larger food manufacturers that will be seeking growth once disinflation settles in. We will examine the different paths management can take to create value and what the challenges are. Is it just a matter of when?
- Vita Coco Company (COCO) is a $1.0 billion enterprise value. It has established itself as the leader in packaged coconut water, proving over the past decade that strong global demand for this healthy beverage option represents a significant opportunity.
- Kura Sushi (KRUS) is a Japanese restaurant chain serving customers through a revolving sushi service model. They have an enterprise value of $655 million or $16 million per store, 4x the annual revenue per store.
