Rapid Growth of Prepared Foods Company Sets Big Upside for Stock in 2018


US grocery stores generated an eye-popping $627 billion in sales in 2016, doubling from just a quarter century earlier.

Amazon (NASDAQ: AMZN) sent shockwaves through the massive industry last year with its $13.7 billion acquisition of Whole Foods.

A bright spot for grocers as they contemplate how to battle their new competition can be found in the bourgeoning prepared foods space.

According to NPD Group, “in-store dining and take-out of prepared foods from grocers has grown nearly 30% since 2008.”

Prepared foods are an emerging driver of growth for grocers and by mid-2016 accounted for 58% of the $24 billion in delis sales, according to a study by the Fresh Foods Leadership Council.

Overall, the prepared foods space, commonly found at the perimeter of stores, is growing at an estimated 8-10% annually, while the center of the store, where non-perishables and other food products are often found, is seeing decreasing sales of 1-2% per year.

How Investors Can Profit from the Prepared Foods Trend

We’ve identified a great stock that has already proven itself in the grocery space, yet it remains relatively unknown to the bigger players on Wall Street.

MamaMancini’s Holdings (OTCQB: MMMB) began marketing its line of beef meatballs and other Italian cuisine products in 2010. Revenue in the most recently reported quarter hit $7.4 million.

Commenting on the performance, Carl Wolf, CEO of MMMB, stated, "The financial and operational results of the third quarter were excellent, and they continue the growth trajectory of the past year. Revenue increased 61% versus last year’s third quarter. We are pleased with the consistent expansion in our most important growth metrics during the past year and we have every expectation of continuing progress.”

MMMB has already secured relationships with major grocers in the US, including Publix, Sam’s Club, and Stop n Shop/Giant.

Kroger, Super Value, Whole Foods, Nash-Finch, AWG, Costco, and Albertson’s/Safeway all have some of their divisions carrying MMMB products, but the company is just scratching the surface of potential distribution.

MMMB is currently available in more than 12,200 stores nationwide. Including Target and Walmart, there are more than 38,000 grocery stores in the US, and MMMB is still only penetrating about 40% of the total.

Combine this growth potential with strong customer retention rates (92% of customers intend to purchase MMMB products again base on July 2015 survey from Vera Quest) and favorable industry trends, and you have the recipe for big stock gains in the quarters and years ahead.

Brand Building through QVC

A secret to MMMB’s quick success has been its growing relationship with QVC, the world’s largest direct to consumer media marketer.

MMMB has launched 12 products on QVC since June 2015. Not only does this channel provide a growing profit center for the company, but it also aids product R&D, brand building, and more. 

The company’s QVC relationship also provides great leverage for its sales team as they forge new business with major grocers who appreciate the hard data demonstrating consumer demand as they evaluate new products for their stores.

Profitable Growth Strategy

In addition to leveraging its QVC relationship, MMMB is focused on expanding existing accounts and penetrating new accounts, which should lead to continued rapid growth and sustained profitability.

Revenue growth has already led to accelerated gross margin expansion, and as volume increases, further leverage of operating overhead occurs.  MMMB has projected a goal of reaching $50 million in sales by late 2018 with EBITDA of $8 million.  Boosting the potential for continued improvement to profitability, MMMB completed the acquisition of Joseph Epstein Food Enterprises (JEFE), a food products manufacturer, in November 2017.

JEFE has been the sole manufacturer of the Company's products since inception.

The transaction locks-in increasing profits consistent with the company's growth plans, provides the company with control over the manufacturing of its primary products, simplifies organizational processes and eliminates related-party transactions which historically have contributed to investor confusion.

With a more streamlined business, a track record of performance, and improving financials in an industry growing at double-digits, investors would be wise to consider owning some MMMB at current levels.

Learn more about this exciting opportunity by watching our exclusive recent interview with MMMB’s CEO and the company’s presentation from our December virtual conference.

 

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MamaMancini's Holdings Inc (MMMB ) is a client of RedChip Companies, Inc. MMMB agreed to pay RedChip Companies, Inc., a monthly cash fee for six (6) months of RedChip investor awareness services.

Investor awareness services and programs are designed to help small-cap companies communicate their investment characteristics. RedChip investor awareness services include the preparation of a research profile(s), multimedia marketing, and other awareness services.




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