Net revenue of about $1 million is not significant in today’s stock market environment. This stock has enjoyed a nearly 70% annual jump in profitability for the year ended November 2007, but most of this is because of a deferred tax benefit that is not relevant for current operations. Gross revenue for 2007 is nearly the same as for 2006, in the neighborhood of $3 million. Why are such pedestrian business results so exciting from a professional investor perspective?
1. Bagels, muffins, and coffee, are more than American. They represent nutrition, convenience, and lifestyle values that people all over the world would love to copy.
2. This company has covered only half of the United States as of the end of fiscal 2007. The management has consistently achieved a healthy net profit margin of over 30% over the past two years. It also has a presence in the Middle East. This is an excellent spring-board for rapid and profitable growth in the near term.
3. The company has a home delivery service, which has enormous business implications for a world of working people. A hot breakfast delivered at your door with the day’s newspapers, is a winning profit formula.
4. The company has separate brand names for bagels, muffins, and for coffee. It does not invest in the umbrella brand of a corporate name. Each of the trade names is attractive, memorable in consumer minds, and a winner in its own right. The management therefore has options of realizing high cash gains by licensing rights to independent food service chains. The company already enjoys support from specialty food distributors.
The stock has closed February 12 2008 at under a dollar and offers a grea investment opportunity.
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