Papa Murphy’s Holdings (FRSH)
The next entry on our list of stocks to short isn’t much better than SODA. Papa Murphy’s Holdings (FRSH) is a recent IPO whose restaurant concept is called “Take N Bake.” Yes, it has lasted for 33 years. Yes, it has 1,425 stores in 38 states. The big idea is made-to-order pizzas … that you take home and bake. Personally, if I want a pizza, I’ll order it over the phone and have it delivered hot. Or go to a restaurant and eat it there.
Some FRSH stock investors would point to a massive store footprint as proof the concept works. Maybe it does, but that doesn’t mean it’s a good stock. Net income across the store base in Q1 was only $819,000 — a 15% YOY increase. Revenue increased 7.5%, and comp store sales were up 3.3%. That’s all good, but the stock has a $158 million market cap on a net income run rate of $3.2 million. That’s 50 times earnings.
That’s too expensive for this pizza pie, and it’s a stock to short with a target of $3.