My Bullish Thesis on The Very Good Food Co.
Possible Growth Prediction
This stock could be worth $40-50 within 10 years.
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Who is the Very Good Food Company ("VRYYF")?
The Very Good Food Company ("VRYYF") is a Canadian plant-based meats company similar to Beyond Meat ("BYND"). The biggest difference here is size and, at least for the moment, branding opportunity.
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Size
BYND - This stock has an $8 B market capacity.
VRYYF - This stock has a $350 MM market capacity.
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Massive Market Opportunity
An investment in VRYYF is an investment in the belief that one day VRYYF can grow into a company that is about the size of BYND.
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CEO ("Mitchell Scott")
Mitchell Scott founded the company on December 27, 2016. Besides VRYYF he was CEO of Snowboard Addiction (A online snowboard training company). In my opinion, not the greatest idea because snowboarding is best learned by doing. He also has experience in social media marketing and he has created an app.
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The Bull Thesis
Very Good Growth - (More to come)
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Well Established Brand - At least in Canada. (More to come)
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Vegetarian Diets are Growing (Recap of the BYND Page) - I have noticed the vegan trend growing ever since I was in college way back in 2009. However, in recent years the vegan trend has really been taking off. This is a trend that isn't going anywhere. Many people who choose to switch to a vegetarian diet never switch back because it is better for your health and the planet!
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The Bear Thesis
Over the Counter Stock ("OTC") (Pink Sheet) - On Planet 13's Page I talked a little bit about why that stock being an OTC stock isn't a big deal. Here, that is not as much the case. The reasons why lie in the other drawbacks to this stock so please read on.
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Review of the Drawbacks of OTC Stocks
The OTC market is a little different than the NYSE and you may encounter several small commission fees when purchasing the stock. Also, the differences between the bid and the ask price may be larger because there tend to be less buyers and sellers in the OTC markets. Less buyers and sellers for your stock also means that sometimes you could be holding a stock that nobody wants (It is rare but it does happen).
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Size - The biggest drawback to this company is its size (Which some people might see as a plus! After all, a smaller company has more room to grow. Smaller companies tend to be more "volatile" (Larger differences between the highs and the lows) because a smaller amount of money coming in or out of the stock can more easily shift the stock price up. Personally, I am a little afraid to invest in such a small company where so many things could go wrong. I missed the boat on the initial run-up on this stock and now I would prefer to wait until the company proves itself a little more or falls back down.
Valuation - Many investors in this stock bought in because Jeremy Lefebvre made a video about the stock. As recently as October of 2020 this stock was worth $1 and within two months the stock rose approximately 700%. I believe a fair value for this stock right now (12/31/2020) is about $3.50-$5.
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Barrier to Entry/Competition - These two things go hand in hand. I have looked up how these plant-based meats are created and it is fairly easy. The recipes may be proprietary but they are fairly easily mimicked (I saw one You-tuber make his own patty by mixing items that can be purchased at your local grocery store). As Beyond Meat continues to experience success I believe that the larger food companies will realize that this is a huge opportunity that is easy to get into and begin making their own plant-based meats.
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Conclusion
This company has large potential growth but a lot of points in the bear thesis section. It is a very good (pun intended) speculative stock, but it is just that, speculative. Buyer beware!