Peter Lynch, formerly the head of the mighty Fidelity Magellan fund, is famously known for his philosophy of "buy what you know". In other words, invest in the stocks of companies that provide products or services you like and use. While this statement over simplifies the research you must do, once you find a product or service you like, it can be a starting point for finding good investments in the early stages of growth.
For early adopters of Apple's (AAPL) iPhone and those who surfed the internet using Google (GOOG) before it went public, the philosophy is probably looking pretty good at this point. However, finding the next big thing is not necessarily that easy.
This brings me to Inventure Foods, Inc. (SNAK). While the name is certainly not common to most households, you may know some of its brands very well. Inventure Foods is currently marketing its products under the following nine brands.
- Boulder Canyon Natural Foods markets primarily all natural kettle cooked potato chips, but has been recently been making headlines with its all natural Rice and Adzuki Bean snack chips. In addition, the company recently introduced a compostable package for its all natural kettle cooked chip line.
- Under a license agreement with Jamba Juice Company (JMBA), Inventure is nationally distributing make-at-home Jamba All Natural Smoothies.
- Rader Farms markets frozen fruit including blueberries, raspberries and berry blends that are "Picked at the Peak of Ripeness"™. The products are marketed in 12 and 36 ounce freezer packs as well as individual snack size packs.
- Under a license agreement with TGI Friday's, Inc. the company markets various T.G.I Friday's bagged snacks including potato skins, pizza chips, buffalo sticks, mozzarella sticks and cheese quesadillas.
- Under a license agreement with Burger King Holdings, Inc. the company markets various Burger King bagged snacks including onion rings, hot fries, cheesy fries and French toast.
- Poore Brothers markets kettle cooked potato chips with an "Intensely Different" taste primarily in the southwest region of the United States.
- Tato Skins markets potato snack chips throughout the United States. Flavors include the original, cheddar & bacon and sour cream & onion.
- Braids Pretzels markets honey wheat, butter braids and Mini Knots baked pretzels.
- Bob's Texas Style markets big, thick kettle cooked chips with intense flavor.
The company reported record results for 2010 and followed it up with record earnings in the first quarter of 2011. Net revenues increased 10.7% in 2010 to $134 million. Earnings per share, excluding trademark write-offs, increased 24% to $0.26 per share over 2009. The first quarter of 2011 saw revenues increase 16.7% to $36.6 million over the first quarter of 2010 and earnings increased 15% to $0.08 per share.
The snack division is experiencing strong demand for its Bolder Canyon Natural Foods products which was the primary driver behind a 12.4% increase in revenues for the first quarter of 2011. The snack division is also seeing demand recover for its T.G.I. Friday's brand as well as growth in its Burger King and private label demand. However, the Poore Brothers brand did not fair so well and held back the overall performance. The Rader division, which includes frozen fruits and the make-at-home Jamba All Natural Smoothies, saw revenue growth of 23.6% in the first quarter of 2011. While the Rader division was certainly boosted by Jamba, net revenues increased 6.7% when Jamba sales are excluded.
The company's continued focus on healthy and all natural foods will serve it well as consumers seek healthier snacking alternatives without sacrificing flavor. As I mentioned before, buying what you know is a good starting point for further research. Go out and buy some Boulder Canyon chips, T.G.I. Friday's potato skins or Jamba All Natural Smoothies and judge for yourself. If you like the product, then it might be worth your time to do some further research on Inventure Foods. If you like what you see, buy some stock and maybe some Poore Brothers chips to help boost sales.