Stock Idea…Ten Peaks Coffee Co Inc

Stock Idea…Ten Peaks Coffee Co Inc

Symbol : TPK

Exchange: TSX

Market Cap : 55.9 Million

Revenue : 84 Million
Three Year Revenue Growth : 15.0 %
Investment Type : Micro Cap Value/Growth

Price/Earnings : 12.6

Forward P/E : 12.9

Price/Book : 1.2

Price/Sales : 0.7

Price/Cash Flow : 8.0

Price : 6.18
Investment Stem : Cheap Small Cap Screen

Ten Peaks Coffee Co Inc is a specialty coffee company owning interest of Swiss Water Decaffeinated Coffee Co. Inc., a green coffee decaffeinator and Seaforth Supply Chain Solutions Inc providing green coffee handling & storage services.

Ten Peaks Coffee Company Inc is a Canada-based specialty coffee company. It operates through two subsidiaries, Swiss Water Decaffeinated Coffee Company Inc (SWDCC) and Seaforth Supply Chain Solutions Inc (Seaforth). SWDCC is a green coffee decaffeinator located in Burnaby, British Columbia. SWDCC employs the SWISS WATER Process to decaffeinate green coffee, which are sold to specialty roaster retailers, specialty coffee importers and commercial coffee roasters. SWDCC also sells coffees internationally through regional distributors. SWDCC's target market is the specialty coffee segment. Seaforth provides a range of green coffee logistics services, including devanning coffee received from origin; inspecting, weighing and sampling coffees, and storing, handling and preparing green coffee for outbound shipments. Seaforth provides all of SWDCC's local green coffee handling and storage services. In addition, Seaforth handles and stores coffees for various other coffee importers and brokers.

The dreaded metrics from Morningstar…

http://quote.morningstar.ca/Quicktakes/stock/keyratios.aspx?t=TPK&region=CAN&culture=en-CA&ops=clear

The company’s website…

http://www.tenpeakscoffee.ca/

An article from seeking alpha from 2015 (just for a little perspective)

https://seekingalpha.com/article/3275465-ten-peaks-coffee-wait-for-a-pullback

This company came up in my cheap small caps scan of the Canadian market a couple of months ago. It is presently trading at not much above its tangible book value so you are getting the operational side of the business for peanuts. The company is currently taking their free cash flow and investing it in a new plant to grow its business in the future. Stephen Takacsy has talked about this company on Marketcall (a phone in investment show on BNN), he has a large holding in the company. I expect much better operational results in the next year or so. Right now it is suffering from low expectations which is a good thing and very commonplace in the underfollowed Canadian small cap market.

Update on Ten Peaks Coffee Inc...as of June 18 2018

Based in Burnaby, B.C., the company is the world’s only third-party producer of decaffeinated coffee using a 100-per-cent chemical-free Swiss Water process. Also provides coffee storage and handling/logistics services. Customers are large chains like Tim Horton and McDonald’s, specialty roasters/coffee chains and global importers. Decaf is growing faster than coffee, and methyl chloride used to decaffeinate most coffee is being increasingly shunned worldwide. Competition is shrinking as two older chemical-free CO2 plants have recently closed in the U.S. and Europe. TPK is forecasting double-digit volume growth in 2018, and is opening a European office to meet additional demand there. It is currently building a new plant to increase capacity by 50 per cent, which will be ready in 2019. Stock is very cheap at 14x trailing P/E and 0.6x sales for a consumer-product company with high barriers to entry, strong free cash flow generation and global growth potential. Also pays a 4.1-per-cent dividend. We recently added to our position in the low $6s, and now own eight per cent of the company.