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Will OATLY be a good stock?


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I just wondered if anyone had any views on the stock OATLY, ticker [OTLY]? Looking out 3-5 years im very bullish on the company and the potential it has to grow. Anyone want to play devils advocate for me.

For anyone that doesn't know OATLY is a Swedish food company that produces alternatives to dairy products from.......Oats. Oatly was formed in the 1990s using research from Lund University. [Its that trendy alt milk they use in Costa and other high end coffee places.] But they have range of other products in that 'Alt' space.

The move from meat and diary by consumers is happening, its happening in our home quite rapidly so im looking to get long some names that stand to benefit from the change in how we eat and drink, or more so what we eat and drink. And its newly IPO'd so there could be a huge ground floor growth story. 

Did anyone catch the 'Beyond Meat' story, they are a plant based meat substitute food producer? IPO 3rd May @ $66 by 26th of July there were at $235. [By Jan there were back down around IPO level however!]

OATLY listing was in May so only a few weeks ago, IPO's are difficult and sometimes best left alone but the stock did rally a bit but has since 'settled' back down. They are new so they haven't reported a 1st quarter yet so no price earnings [P/E] ratio or EPS data yet. But they have a market cap of around 15bn [USD] at around 25 bucks a share. Given the markets they operate in, the industry tail winds and possible expansion into new territories and with new products - I'd place a, relatively achievable, price target on this stock of $70-80. Within 5 years it could 5 times the size it is now, if management carry out the operating plan and the trend changes planned in the alt space continue as predicted. 

Competitors: well a fair few in the 'alt' space large firms like Alpro etc but none directly you could argue in the Oat space.

The company is expanding and whilst it is a Swedish company they are building one of the worlds largest non dairy factories in the UK [in Peterborough actually] and I think further expansion into the US is planned, which represents a huge market for them. They could even be the subject of a buy out / acquisition from one of the larger diary companies looking to diversify or even another company in the 'alt' space looking for a larger footprint. Who knows even Amazon could be after them for their wholefoods business and Amazon fresh. 

The big plus for this company is the ESG's. Anyone funds looking to add names could pick this up quite quickly as they have a clear environmental message. So its all there to play for but they will need some good analyst ratings with good price targets and then re-ratings as the price targets move up... 

Financials on the company are loss making for this year. Can be off putting for most people. In bull markets this might not matter with a growth story like this however when things are bad non profit making companies tend to get hurt the most. 

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I actually bought the IPO Dave, have you bought anything yet? Its dipped slightly since your post im sure you've probably taken advantage of that. Price up since listing though, which is great.

I'm waiting on the next earnings call, ill hopefully get on that live, as an earnings miss for a company where analysts expect a loss shouldnt be much to write home about but an earnings upgrade could be fantastic for this stock. That's where we could really see it start to motor.  

ESG's for this stock as you say are great and yes, again, as you said I did watch beyond meat stock head north.

I mean you pose this stock against a high growth 'diary' stock and this has potential to 5-10X provided there is no reversal in the current trend of moving away meat and diary...

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