A lot of the blank-check deals we’ve seen in recent months have one thing in common. They’re geared to capitalize on changing societal trends and interests. One of those – with a twist – is Tattooed Chef (NASDAQ:TTCF) stock.
Tattooed Chef went public in a special purpose acquisition company deal between Forum Merger II and Ittella International that was approved in October. Shares began trading on the Nasdaq in November, so this one’s still pretty new to investors.
What makes this one a little different is the core business.
A lot of SPACs these days are tied to technology, with electric vehicles and autonomous vehicles a dominant theme. And granted, there’s a lot to like about some of those companies.
Tattooed Chef is a SPAC of a different flavor – literally – because it’s involved in the healthy foods space. TTCF stock is a play on the growing interest in eating plant-based foods and using sustainable ingredients.
There’s Money to Be Made From Plants
The Plant Based Foods Association and the Good Foods Institute have data showing that plant-based foods had a $5 billion market in 2019 in the U.S., with year-over-year sales growth of 11.4%.
Just as notably, the associations say that plant-based food sales rose five times faster from 2018 to 2019 than overall U.S. retail food sales.
Milk – products such as almond milk – made up $2 billion of that on its own. But there are plenty of other plant-based products showing rapid growth, including creamer (34.3% YOY growth), yogurt (31.3% growth), meat (18.3% growth) and eggs (191% growth).
Plant-based eating isn’t a fad. It’s a way of life that’s becoming more popular these days, according to Caroline Bushnell at the Good Food Institute.
Clearly, plant-based is a lasting trend that is gaining power over time. We see a steady rise in plant-based products year over year across regions, which indicates that this is not a bubble or a fad, but a real change in consumer behavior. This is a tipping point, with so much product innovation yet to hit the market.
TTCF Stock at a Glance
Tattooed Chef has agreements with Costco (NASDAQ:COST) and Walmart’s (NYSE:WMT) Sam’s Club to provide plant-based products meals – which is another segment that is showing rapid growth. The products are also available at Target (NYSE:TGT) stores.
With products such as cauliflower crust cheese pizza, organic acai bowls and Mexican style street corn, Tattooed Chef is hoping to cater to people who want to live a plant food-based life but don’t have the time or energy to do a lot of food preparation.
The company says most of its ingredients are from Italy, where the company plants its own crops and manufacturers the ingredients and products themselves.
While its year-to-date performance isn’t that impressive – up only 3% since Jan. 1 – the company is still rebounding from a short-seller report in November from Kerrisdale Capital. Since the report was issued, TTCF stock climbed more than 40%.
Tattooed Chef projected $148 million in sales in 2020 and 50% growth in 2021 to $222 million. The company claimed a market capitalization of $1.7 billion at its launch.
The Bottom Line
Undoubtedly, plant-based food options are growing in popularity. For them to be more mainstream, however, it will be important for companies such as Tattooed Chef to make plant-based foods appealing to the masses.
The company makes foods that are vegan or vegetarian, organic or GMO-free. It says it has a goal to make plant-based foods “exciting, creating wellness for ourselves and the planet.” That’s a laudable goal.
The key for TTCF stock will be the company’s ability to expand its reach into more grocery chains. If it can accomplish that, TTCF stock will be off to an excellent stock.
TTCF stock has a “B” grade and a buy recommendation in my Portfolio Grader.
On the date of publication, Louis Navellier was long COST and TGT.
The InvestorPlace Research Staff member primarily responsible for this article did not hold (either directly or indirectly) any positions in the securities mentioned in this article.
Louis Navellier had an unconventional start, as a grad student who accidentally built a market-beating stock system — with returns rivaling even Warren Buffett. In his latest feat, Louis discovered the “Master Key” to profiting from the biggest tech revolution of this (or any) generation.
