Small-Cap Stock Highlight: Andrew Peller
The TDR three key takeaways regarding Small-Cap Stock Andrew Peller
- Andrew Peller is a standout small-cap stock for wine industry investors.
- Small-cap stock Andrew Peller has a solid history of 44 years of dividend payments.
- Andrew Peller is expected to focus on growth after resolving supply chain issues.
Andrew Peller LTD (TSX: ADW.A, OTC: ADWPF) is a small-cap stock worth considering for investors interested in a unique vertically integrated wine business. The company, which operates in the Niagara region of Canada, has a long history of paying dividends for 44 consecutive years. Andrew Peller LTD’s business model covers every aspect of wine production, from grape to store, and it operates all of “The Wine Shops” in Ontario. The company also partners with Wayne Gretzky for WG wines. Notably, Andrew Peller faces challenges similar to those of cannabis licensed producers, particularly concerning excise taxes.
The company’s stock trades at $2.79, with a market capitalization of $124 million. Despite a light trading volume, the stock is accessible for online purchases. The company’s revenue of $285 million reflects a modest five-year compound annual growth rate of 1% (in USD), while the global wine industry grows at around 4% annually.
Andrew Peller’s post-COVID normalization, particularly with resolved supply chain issues and new debt agreements, positions it for improved performance. The company reported a strong gross margin of 36% and levered free cash flow of $24 million for small-cap stock. Its tangible book value is $2.72. The company’s vertical integration model, allowing control from grape to retail, aids in managing quality and costs but faces challenges from excise taxes. The company’s recent normalization of supply chains and beneficial new debt agreements support its growth prospects.
Andrew Peller’s strong dividend track record, yielding 6.5% with a growth rate of 6.6%, is of interest to dividend investors in small-cap stock. The company’s EBITA has improved in recent quarters, highlighting its resilience. In fiscal 2023, the company recorded a net loss, attributed to increased expenses and restructuring costs. However, the third quarter of fiscal 2024 showed solid performance amidst macroeconomic headwinds, with plans to continue improving profitability through various operational strategies.
For those interested in cannabis, this is a very interesting name because it’s vertically integrated. The company goes right from grape to selling the final product in a store owned by themselves, completely vertically integrated. This vertical integration allows Andrew Peller to manage quality and costs effectively. Additionally, I read through all their annual reports while I was analyzing small-cap stock companies. They had a lot of supply chain issues in the last five years. Despite these challenges, the company has made improvements that are expected to benefit its bottom line. It seems credible to me. They’ve also made some other improvements that’ll help their bottom line besides just revenue like lowering their cost of capital on debt agreements.
Andrew Peller LTD is a solid small-cap stock with promising potential, especially for dividend-loving investors. The company’s robust dividend history, strong positioning, and vertical integration model make it an intriguing choice for those interested in the wine and beverage industry. To keep up to date with all of TDR’s research and news, subscribe to our daily Baked In newsletter.
