Last Thursday we presented our 102 page Black Book on WWAV and why it is deserving of being on Hedgeye Consumer Staples’ Best Ideas list as a Long.
Materials:
Slides: CLICK HERE
Presentation: CLICK HERE
Our thesis builds off of three main pillars:
WWAV has been on Hedgeye’s Consumer Staples Best Idea list as a Long since 4/11/14, and since then has risen approximately 80%. But we don’t believe it is stopping here, management at WWAV is just warming up.
Since their IPO in 2012 WWAV has added three businesses, Earthbound Farm, So Delicious and most recently Vega. One sector they do not play in currently is meat alternatives, and we believe this could be a big growth driver for them in the future.
This company has been performing admirably, with low-double digit organic growth over the last eight quarters.
We strongly believe that the growth of plant-based foods is just beginning ― they have barely penetrated 30% of households in the U.S.
Another alternative to creating shareholder value is the potential of a competitor buying WWAV. We believe that there is a strong possibility of this happening within the next 1-3 years. Given the desperation for growth in this industry, companies have to be looking at WWAV as a possibility.
Commodity pricing is always going to be an issue for a natural organic CPG company or any CPG for that matter. WWAV management has been able to keep the affects in check as they maximize efficiencies across their supply chain. Additionally, WWAV has amazing brand loyalty, highlighted by their Horizon brand, in which all top line growth recently is driven by price, signifying that customers need the product and are willing to pay the premium.
Bottom line this is one of the best companies we can find in the consumer staples space. And we are looking forward to continuing to keep you up to date on all the action.
Please reach out if you have any questions.
