Shares of Tattooed Chef (TTCF) are suffering double-digit percentage selloff Monday to one month lows, as fear of uncertainty grows among investors.One good news did not help that.
You asked for it, and we delivered 😎— Tattooed Chef Foods (@eattattooedchef) October 26, 2020
We're here today with some BIG NEWS! Not only did we launch a slick new site, we are also officially open for business ONLINE. Yep, you heard us right - you can now order #TattooedChef right to your door.
Visit https://t.co/7VSzx84Tqv pic.twitter.com/cHujqip65k
Tattooed Chef Inc. (NASDAQ: TTCF) is a boutique FMCG (Fast Moving Consumer Goods) food company that specializes in providing plant-based and completely organic food to consumers. The company’s products include ready-to-cook meals, ready-to-eat meals, and essential ingredients such as plant-based pasta and pizza bases. The company has distribution agreements with leading US department stores.
The company started its life as Ittella International and later underwent a reverse merger into a SPAC called Forum Merger II Corporation to form Tattooed Chef Inc. earlier this year.
This year’s pandemic has proven to be a heaven-sent opportunity for the company. It forced consumers to cook at home because eating out became dangerous. This spurred the demand for ready-to-eat/ready-to-cook meals.
The virus also sparked a consumer shift to plant-based foods from meat due to its lack of availability owing to big disruptions in its supply chain. Consumers also turned meat averse on the news of large numbers of COVID infections at meat processing plants. The company’s products were well-placed to take advantage of this shift because of their easy-to-prepare or ready-to-eat design.
Tattooed Chef is currently focused on the rapid expansion of consumer reach and profitability. It is looking to slowly shift its product line from private label to own-brand, which it hopes will lead to fatter margins and higher multiples. The company is currently trading at an EV/EBITDA of 30 times – a fraction of other plant-based food companies like Beyond Meat (NASDAQ: BYND) – which is trading at a triple-digit multiple.
Over the last year, the company has increased its EBITDA margin to 11.6% from 8.2%, an increase of over 40%. The management expects this year’s margins to expand further to 13.2%, an increase of another 14%. Prospective investors should note that these figures could see further and substantial improvement under the company’s own brand. In the first six months of the year, the company has seen its revenue grow by an impressive 97%, compared to just 54% at Beyond Meat. (Motley Fool)
On the consumer reach front, the company has massive opportunities ahead. As of the last quarter, the company’s products were in just 7% of Walmart Stores, according to CEO Sam Galletti, who is confident that this could rise to 50% by the end of this financial year.
That is approximately 4,900 new locations for their products to sell at. The company also recently signed a deal with Costco Wholesale and plans to make inroads into regional departmental stores as well. The company also recently launched it’s own direct to consumer sales channel in the form of an online store.
The company mirrors Beyond Meat, which has become a stock market star, in terms of growth opportunities but is cheap in terms of valuation.
This is the rare combination that smart investors look for and make the stock an interesting prospect.