The Shares Researcher

Intro Pizza Pizza Royalty Corp owns certain trademarks and trade names in its franchise-oriented restaurant businesses operated primarily in Canada. Of the more than 700 restaurants, the majority is franchised, where Pizza Pizza Royalty Corp earns royalty income equal to 6% of the sales of Pizza Pizza restaurants and 9% of the Pizza 73 restaurants In short, a part of the sales (i.e. system sales) generated in the Pizza Pizza and Pizza 73 restaurants has to be shared with Pizza Pizza Royalty Corp – sounds confusing because there is just too many times the word pizza involved yet the methodology is fairly simple. Thus, an important driver is the ‘same store sales growth’ or SSSG which is, simplified, the organic growth rate of the restaurant portfolio. Annual SSSG was increasing yearly by roughly 1% to 3% from 2011 to 2016. Starting in 2017, however, this trend has been slightly negative and seems to be a key factor of the current opportunity the share price offers. Valuation ...

Intro Swiss Water Decaf is a company I have been following for a few years – they have made significant progress culminating in the completion of a new, bigger facility at the end of 2019. Swiss Water Decaf, as the name suggests, is a Canadian producer of decaffeinated coffee, using its SWISS WATER® Process to decaffeinate green coffee without the use of chemicals. The processed coffee is then sold to more than 50 countries, of which the lion’s share of the production goes to the USA, followed by Canada. With the opening of a new European subsidiary in January 2019, the company is now also selling its specialty coffee overseas. Total volumes shipped increased by 16% in the first 9 months of 2019, 11% in 2018 and 5% in 2017. Due to additional capacity coming from the new facility, new geographical markets and a consolidation of the decaf market, it is expected that volume trends continue to perform nicely. Valuation Swiss Water Decaf is a hidden gem with a market capitaliz...

Intro Massimo Zanetti is a world leader in the production, processing and marketing of roasted coffee, distributed in around 110 countries. The company, headquartered in Italy, operates 18 facilities across Europe, Asia and the Americas, and has a global network of around 400 coffee shops in 50 countries. Massimo Zanetti has been a consolidator of its market and is purchasing constantly smaller competitors, as was the case in 2018 with the acquisition of the Australian brand ‘The Bean Alliance’ for around €21 million and Nutricafés S.A. as well as Segafredo Zanetti Worldwide Italia S.p.A in 2016 for €44 million. The chairman and CEO, Massimo Zanetti, indirectly still holds ~68% of the company following its IPO in 2015. Valuation In sum, Massimo Zanetti generates around €900 million in revenues per year. Historical net profits were in the area of €15 to 20 million, which is, compared to its current market capitalization of €203 million, a P/E of approx. 12x. As of Q3 2019, t...

Intro The first company discussed is probably well-known for everybody: The Kraft Heinz Company. After the merger between Kraft Foods and Heinz (yes, the Ketchup maker) in 2015, the company had its struggles culminating in 2019 with impairment charges and a SEC investigation. Since then, a new CEO took office and the quarterly dividend was reduced. Valuation Even though sales have been declining slightly, net profits have hovered around $400 to $900 million per quarter which translates into roughly $3 billion net profits per year. Assuming the consumer behavior doesn’t change massively in the next few years, Kraft Heinz ought to be able to generate at least similar profits going forward. It is believed that EPS of at least $3.00 per share will be possible and sustainable, which turns into a P/E ratio of 10x, an attractive valuation for a quality food stock such as Kraft Heinz. With total long-term debt of approx. $30 billion (and total assets of >$100 billion), the leverage of Kraft...

Dear Reader, You may ask yourself, why should you read another blog about stocks and shares – there are already tons of them online where you can easily waste valuable time.  This one is different, due to the following reasons: Contrarian: The author of this blog doesn’t share common beliefs when it comes to the stock market. Time and time again the contrarian investing approach has been the only bulletproof method that has worked since the advent of public markets (and many times also in daily life). Concise: The entries in this blog will be short and concise in order not to waste your time. There won’t be a historical write-up about the company discussed; rather, it is expected that the interested reader can do this on his or her own, if deemed useful. Frequency: There won’t be any daily, weekly or monthly updates. If the author has something to tell, it will be published – if not, the blog will remain quiet. It is estimated that there will be on average only one post per...