Trading On margin

High growth stocks: the king of food stocks trades cheap


Premium brands (TSX: PBH) is an investment platform focused on acquiring and building food-focused businesses in partnership with talented entrepreneurial management teams. The Company’s current holdings consist primarily of specialty food businesses and premium food distribution businesses.

A key characteristic of a specialty food business is that a consumer’s decision to purchase products is based primarily on factors other than price, such as quality, convenience, health, and method of purchase. life. As a result, specialty food businesses owned by Premium Brands typically earn higher and more consistent sales margins compared to food businesses that focus on less differentiated products. In addition, due to various consumer trends affecting the food industry, these companies also tend to generate higher sales growth rates than large domestic and international food companies.

Specialty Products

In the company’s premium food distribution segment, Premium Brands offers its customers specialized and unique products and services in addition to logistics solutions. This generally allows it to generate higher and more homogeneous commercial margins compared to large national and international food distributors mainly focused on logistics. The Company’s premium food distribution business also allows it to generate and maintain additional margin by using these businesses to provide Premium Brands’ specialty food businesses with exclusive access to a broad and diverse customer base that includes regional and specialty food retailers, restaurants, hotels and establishments.

The company’s core strategy of acquiring and developing specialty food and premium food distribution businesses in partnership with talented entrepreneurial management teams results in a number of competitive advantages. Premium Brands’ investment is focused on food companies whose core strategies are based on product differentiation and constant innovation in all business elements, including product development. These strategies generally allow the company to generate higher and more consistent margins and avoid competing with the traditional large multinationals in the food and food distribution sector.

Culture of entrepreneurship

In addition, the company actively promotes a culture based on the core values ​​of entrepreneurship among various companies. As a result, it empowers employees to make decisions and has avoided creating the bureaucratic structures and multiple layers of management associated with many large food companies. This has resulted in a very dynamic and creative environment in which the businesses of the enterprise can identify opportunities and problems in a timely manner and, more importantly, react quickly to such situations.

Focus on the regional market

As the owner of a number of specialty food and premium food distribution businesses, each operating on a semi-autonomous basis, the company is able to maintain a focus on the regional market while using the overall size of Premium Brands to gain competitive advantages over other smaller regional specialties. food and food distribution companies. These benefits include better access to capital and greater purchasing power for a range of products and services.

A number of the company’s businesses sell products under one or more proprietary brands, several of which are recognized as the leading brand in a specific segment of the specialty foods market. By owning both food manufacturing and distribution businesses, the company is able to generate cross-synergies, which should serve shareholders well in the long run.

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This article represents the opinion of the author, who may disagree with the “official” recommendation position of a Motley Fool premium service or advisor. We are straight! Challenging an investment thesis – even one of our own – helps us all to think critically about investing and make decisions that help us become smarter, happier, and richer, so we post sometimes articles that may not conform to recommendations, rankings or other content. .

Foolish contributor Nikhil kumar has no position in any of the stocks mentioned.



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