Why You Should Buy Small-Caps With Premium Products
Things are looking up for the economy as recent jobs and housing figures rebound, pushing hedge investments like gold down.
The slow recovery is also resulting in a shift in market movements, including consumer demand for premium products and services.
While the years during and after the recession focused more on basic commodities at cheap prices, today’s expanding incomes are influencing consumers to spend more on quality items.
In the food industry for example, the packaged goods market, specifically the soup segment, is expecting more growth in value than in volume.
A Euromonitor report on the soup industry said that it would rebound in the next several years with the sales of new products that are healthier and are marketed as premium or gourmet. These products will have higher unit prices, causing value sales to increase amid a projected decline in volume sales.
For the next five years, the industry value will mostly be banking on marketing and an emphasis on quality, propping up smaller players with superior products.
The Original Soupman (OTC: SOUP) is riding this wave through its marketing offensive. The restaurant chain, most popular in New York, has not only entered the packaged soup market but also dipped its hands in food truck franchising.
Its 40 or so soup variants are now being offered by food trucks in New Jersey. A spin-off of the restaurant , in the form of its Al’s Famous New York Delicatessen & Restaurant, has also been opened in Atlantic City’s Mohegan Resorts Casino Hotel. Other delis are expected to be launched in casinos all over the country.
Soupman is most known for its gourmet soups like lentil, jambalaya, lobster bisque, crab corn chowder and butternut squash. It gained further popularity after it was featured in the sitcom Seinfeld, which based one of its characters on Soupman’s founder Al Yeganeh.
Other small players making waves in the food industry is Greek yogurt brand Chobani, which is predicted to go public soon. The high protein food trend has been bolstering sales of Greek yogurt, a niche market dominated by Chobani.
Another company to watch out for is the Rocky Mountain Chocolate Factory (Nasdaq: RMCF), which sells premium chocolate candies and confectionary products. Notable is the candy maker’s partnership with Kellogg’s last year when it launched a cereal made of sweetened corn flakes, almond slices and chocolate pieces.
Investors may also want to dip their hands in artisan sodas by buying the small-cap stocks of Reed’s (REED) or Jones Soda Co. (JSDA). Jones makes soda made from cane sugar while Reed’s manufactures naturally brewed sodas.
The following article is from one of our external contributors. It does not represent the opinion of Benzinga and has not been edited.