Opinions Jordan Zinberg
Happy Belly Food GroupHBFG-CSEBUY ON WEAKNESSDec 02, 2025
Jordan ZinbergStock price when the opinion was issued
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Executing well. Building out its brands. Aiming for 100 new restaurants this year, 600 in the pipeline will take a few years. Stock's pulled back. Has to grow into its valuation. Good time to buy as it consolidates before the next uptrend.
Bruce Campbell (2)We would be temper our expectations on a name like this. It has had a good run but as a restaurant consolidator is trading at 8X sales. It is small and trades on the CSE which likely adds to volatility. The company does carry a bit of debt as well. In fairness, they are trying to grow quite fast and appear to be signing a lot of franchise deals but restaurants are hard and have low margins so we would prefer to see some execution here as the franchises become operational.
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"Bet on the jockey, not on the horse." New management increased share price from 10 cents in 2021, today $2. Management gets different incentives for a share price between $3-10. Consumer packaged goods and quick service restaurants. Buys brands and then expands them. Only in certain provinces across Canada, and just went into the US. Now showing up on radar of lots of institutional portfolio managers. No dividend.
(Analysts’ price target is $2.40)Bruce Campbell (2)Buys small (but growing) businesses in the restaurant/quick service/consumer products segment, and then rolls out more locations. Low-capex model. A lot of the costs are often paid by the franchisee, while Happy Belly collects a royalty on topline sales. Really hot space right now. No dividend.
Bruce Campbell (2)Incredible job scaling the business. Close to 500 franchises in development, which should take about 3-5 years. About $2-2.5M in revenue per quarter, anticipates a ramp up to ~$4M next year. Lots of faith in CEO -- a passionate and excellent entrepreneur, who's really good at identifying concepts early, buying them cheaply, and building them out.
Valuation not cheap, and that's keeping him out. If you can be patient, you'll be fine with current valuation. But it's already done incredibly well, so may need to base while it backfills the valuation.
Are a bunch of fast-food restaurants. Are growing like crazy in Canada as they sign some deals in the U.S. Usually, they buy a smaller brand, then grow that brand using marketing, real estate and branding. Loves the company, but the valuation is ahead of itself.