Today I am going to reveal the stock heavily touted by the Motley Fool for its stock advisor newsletter in the recent past, no this is not Tim Horton’s (THI) as most of you had expected after its recent run-up, or a mining stock either. Instead this is kind of restaurant business.
Typically when you hear about a sales tout from a newsletter vendor you expect it to be a miner but this one from the Motley Fool is little different it has nothing to do with pipelines, tar sands, or gold, or anything most savers expect about Canadian investments.
So here’s a bit of clues from the newsletter.
“In just a moment, I’ll discuss what I believe is one of the best opportunities for Canadian investors this year — a rapidly expanding franchise company with the potential to make you a small fortune.
“The company I’m talking about is cashing in on the craze for “Quick Service Restaurants” (QSR) here in Canada—the franchise trend that has already built a $21.7 billion industry just in Canada alone.”
So those are signifying that the (super-secret) Canadian stock Motley Fool pitching in their ad is… I know you must be curious and drooling by now…
But let’s dig into more from the sales pitch.
“Each week/month, the legion of franchised stores (over 2,500 strong) all send their royalty cheques to the company’s headquarters. “
This return could pale in comparison to the next 10 years, especially if this firm becomes the target of a buyout….”
This to me seems to be a company that has growth through their franchisees and it is a generally a good thing too, for it requires smaller capital expenditure to operate and less overhead costs.
That should be enough of the blather as the clues clearly point to MTYFF a pink sheets stock MTY Food Group Inc. (small cap stock with MCap of nearly $600 million) based out of Toronto whose major sales comprise of franchisee sales. They are in business for a decade and mass media introvert at it.
They do have a food processing plant and distribution center in Quebec that serves well and it’s all about the growth in royalty fee in the range of 50% and the margins that keep rolling in their cash vaults.
I very much like their business model its very appealing from an investor’s perspective they have a centralized management and are growing in spite of weak sales, will they be able to keep it up that’s the lingering question around the business model of a franchisee dependent player it’s up to you to decide and make a call on MTYFF.
Let me know your thoughts on MTYFF with a comment below.