Bark Box – an online subscription service for pets. They offer; Bark Box ($25/mo for a box of goodies), Bark Eats ($30/mo for food), Bark Chewer ($45/mo for chew toys), and Bark Bright ($30/mo for dental health products). They currently have 1 million monthly subscribers to their Bark Box option, and have only very recently branched out into the other offerings which provide further potential sales upside for the company. Since they make everything in-house, they also enjoy solid gross margins of 65%.
PlayBoy – the infamous brand has gone public recently with the aim to expand their business. PlayBoy has historically just sat back and licensed their brand out for other people to use (clothing, gaming), but are now looking to take back control of their brand and use it themselves. Their main focus areas are; clothing, gaming (PlayBoy casinos), and sexual wellness products, whilst they’ve shut down their legacy magazine. The brand is gaining traction in clothing, and at levels below $12 a share is quite reasonably valued.
Dusk – an Australian physical retailer who is the market-leader in fragrance products (candles, incense). The stock is quite cheaply valued at levels below $2.50 as investors have assumed that the decline in mall traffic will hurt their business. However, Bath and Body Works is the US-version of this company who is thriving regardless of mall traffic due to the sensual experience they offer which makes people want to go visit in-person in malls. They’re also building up a stronger online presence which enjoys higher profit margins. Be careful though, their sales have grown hugely due to people being stuck at home and wanting a nicer experience, so don’t expect the 40% growth to continue long-term, but despite this it still has solid long-term prospects.
A2 Milk – a pioneer in the otherwise-stagnant industry of milk. A2 milk has absolutely crushed it in recent years and while it may be nearing its maximum here in Australia and New Zealand (with growth of only 15% last year), its barely scratched the surface in China (only 2% market share), who love what A2 has to offer. Sales from China grew 65% last year and now constitutes nearly 50% of the company’s entire sales. They’ve also just entered the US market with growth of 90% last year. The company has plenty of cash on its balance sheet, huge growth potential in China and the US, and after its recent stock collapse of 50%, can be bought at a $10 stock price which implies a FCF multiple of just 20x. Considering that the banks are at similar multiples with none of the growth opportunity, this is a great chance to get a perfect company at an insanely reasonable valuation.
Kathmandu – an Australian outdoor clothing company that was never seen as much of a mainstream brand until their wind-breaker jackets and vests took off in 2019-20, giving their brand that high value appeal and recognition. This gives them the opportunity to leverage their newfound brand value into other items, whilst also allowing them to charge higher prices and earn higher profit margins. The stock has hovered around the $1.20 mark for quite some time now, and still remains remarkably cheap in today’s climate on nearly every metric. They also acquired the surf brand Rip Curl in 2019 which they’ve said is capable of adding $20million in FCF to the company, which would be a 30% boost for them. They paid $350million for Rip Curl, but due to the impact of the pandemic on the retail landscape, haven’t been able to exhibit the potential value of this acquisition and so the company remains pretty well forgotten by most investors but contains big upside potential once they demonstrate their numbers.