Opinions
Ryan Modesto
Ten Peaks Coffee Co
TPK-T
COMMENT
Apr 11, 2017
Stock price when the opinion was issued
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Unusual in that it has almost the only non-chemical decaffeination process. It needs to be acquired by someone who wants the decaffeination process. It is not dynamic and is not going to do anything gigantic. You have to be aware that in coffee there can always be a year that goes wrong.
A coffee decaffeinater and distributor. There is a lot to like about this company. Has a pretty strong balance sheet and pays about a 4% dividend, which look sustainable. Coffee prices are falling, which means you have higher volumes and higher purchases from distributors. They’re building a new plant expansion, which won't be finished for another 1.5 years. As an investor, you’ll probably have to wait 1.5 years for things to ramp up, so you’ll have to be patient. There isn't any catalyst right now for the next leg of growth.
He owns 8% of the company. You have zero analyst coverage. They are the only ones in the world to do this chemical free decaffeination process. You are going to see some good volume improvement going forward. You may see some analysts starting to cover it. They need to beef up their investor relations. They have good margins and good cash flow. It has international growth potential also. It is not an expensive stock.
He owns 8% of the company. The company has never been doing better and the stock has never been cheaper. This is the only company in the world that does chemical-free decaffeination in large volume. One of a competing company’s plants closed in Europe and that is driving new volume to TPK. His customers are Tim Hortons, McDonald’s Canada, and several importers. The company has great margins. He’s convinced the stock will go up quite a bit by next year.
A de-caffeinated coffee company which is growing faster than the caffeinated coffee market. Driven by health trends. Over the last years they've been building a new production facility which will open up their capacity, so the company will grow. They're gaining market share and launching a sales force in Europe. They're setting themselves up for growth. Cheap shares, nice 4% yield. May have to be patient until the facility opens in Q3 2019.
This does green coffee decaffeination. They have some big customers such as Tim Hortons, so there are some concentration risks being at the mercy of these companies. The real story is the plant expansions they are doing. In mid to late 2018, they are essentially building a new facility to help the company grow a bit more. The problem is that investors are kind of stuck waiting for 1-1.5 years for something to really happen. The dividend is nice. Half market cap is in cash. A situation where the management needs to step up and throw the investors a bone to keep them interested for the next year. Not a bad name, but you could revisit this in 6-9 months and are maybe not going to miss out on too much.