Tattooed Chef Inc. (NASDAQ: TTCF) is a company that is making waves right now and appears to be well-positioned in an industry that is seeing rising growth. The stock has gained 87% in the past 12 months. The company is expected to see further growth in the coming years and there are several factors working in its favor.
Tattooed Chef is a food company that manufactures frozen plant-based food products. Unlike its counterparts, the company offers vegetarian food options that go beyond burgers and sausages. Its offerings include riced cauliflower, zucchini spirals, acai and smoothie bowls, ready-to-cook bowls, and cauliflower pizza crusts.
Tattooed Chef delivered revenues of $148.5 million in 2020, up 75% from the previous year, driven by triple-digit growth in the company’s branded products. For 2021, TC has guided for revenues to gain 49% year-over-year to $222 million thereby continuing the momentum. This would reflect a compound annual growth rate of 68% from revenues of $47 million in 2018.
TC reported a net income of $45.4 million in 2020 compared to $5.6 million in the previous year. The results include a one-time tax benefit of $39.3 million and a stock compensation expense of $3.39 million. Even without these items, the company would have recorded a healthy profit which is a good sign. For 2021, TC expects net income to range between $2.5-5 million.
The company also has a solid balance sheet with cash of $131.6 million and debt of just $1.9 million, which gives it enough opportunity to reinvest in its business.
Tattooed Chef offers a variety of products and continues to innovate in this area. In 2020, the company rolled out a number of new offerings such as vegetable blends, smoothie bowls and buffalo cauliflower and it has ideas for another 150 plant-based food items in the pipeline.
In 2020, TC saw an increase in the number of US distribution points. At the end of last year, Tattooed Chef’s products were available in more than 4,200 stores and 23,000 points of distribution. These efforts helped generate revenues of nearly $85 million from its branded products, reflecting a growth of 363% from the prior year.
Tattooed Chef plans on increasing its store count by 41% and points of distribution of its branded products by 35% by the end of the first quarter of 2021. The company’s goal is to make its products available in 10,000 stores and 65,000 points of distribution by the end of this year. TC doubled its manufacturing capacity in 2020 and plans on doubling it again in 2021.
Tattooed Chef has a significant growth opportunity as the plant-based food industry is rapidly gaining steam. The company’s products, which are different from the burger patties and sausages offered by its rivals, will continue to find favor with customers who are looking for varied options in vegetarian and vegan food. TC also stands to benefit from the trend of more people turning to healthier diets and lifestyles.
Frozen food products provide the element of convenience which is another advantage for Tattooed Chef. In 2019, 57% of customers opted for food products that were convenient to cook and store. Plant-based frozen foods are gaining popularity among millennials and Gen Z and this will benefit TC in the near-term. Tattooed Chef sees an opportunity to penetrate the $380 billion global frozen food market over the long term.
In general, the sentiment around this stock is bullish and based on the market opportunity and estimated future growth potential, this one is worth keeping an eye on.
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