Valens Equity Weekly Insights for June 28, 2022
June 28, 2022
- Fox Factory (FOXF) has a high quality brand and growth opportunities into related markets. Uniform Accounting shows the value of the company’s brand, and it shows that the market isn’t pricing that sustainably. That makes Fox Factory a compelling buy.
- Fox Factory has historically been a high-quality branded business, with Uniform ROA consistently above 28% since going public in 2013. The company has since grown into related markets that significantly open up its market reach while maintaining its strong brand value.
- Fox Factory’s management is aligned to focus on growth, specifically profitable growth. EBITDA growth, ROIC, and FCF metrics should help management focus on growth without potentially overleveraging the balance sheet or buying low-quality assets.
- Cracker Barrel (CBRL) is being removed from the Conviction Long List. The company is struggling with wage inflation and rising oil prices, so we are closing down 36%.
