TurboChef: Fast Cooking, Fast Growth
02/04/2005 12:00 am EST
As its name implies, The Growth Report, focuses on uncovering undervalued growth stocks, with a focus on emerging growth stories that have yet to gain widespread attention. Here, editor Ian Wyatt looks at a play on "fast cooking" for fast food.
"TurboChef (TCF AMEX) designs ovens utilizing patented technologies that provide restaurants with the means to prepare very high quality food, cooked to order, in shorter periods of time when compared to conventional cooking techniques. Its C3 Oven is capable of cooking a wide variety of foods including hamburgers, steak, chicken, and fish, while the Tornado is designed to cook, toast and brown sandwiches, pizzas, and appetizers. The ovens require no ventilation, which reduces installation costs. TurboChef maintains a portfolio of over 200 patents and patient applications to protect the company's proprietary technologies.
"TurboChef began gaining traction in March 2004 when the company signed an agreement with Subway Restaurants to be the exclusive supplier of rapid cook ovens to more than 22,000 Subway restaurants worldwide. Other current clients include Hyatt Hotels, Hilton Hotels, AMC Theaters, Starwood Hotels, Bellagio Hotel, Loews Cineplex, Soldier Field, Lambeau Field, Luxor Hotel, and Express by Holiday Inn. We note that Starbucks is currently in the process of a test with TurboChef. We believe deals such as this could be right around the corner for TurboChef. The firm also plans to enter the residential market in 2006, which could prove to be a longer-term growth driver. In addition, international sales currently make up less than 10% of total sales, yet that market is estimated to be at least two and a half times the size of the North American market, and represents a significant long-term opportunity.
"Looking to 2005, TurboChef certainly has several irons in the fire, with thirty tests or negotiations currently underway. We believe that the company should be able to secure several big name deals in 2005. Despite the normal risks associated with an emerging small cap growth, we believe we have a long term winner on our hands. In our opinion, the rubber is hitting the road at TurboChef. With the potential for numerous deals on the table, we believe the long term opportunity for the company is great. The stock is under the radar screen of most investors. While the near term is uncertain, we are quite confident that the long term opportunity is significant, and investors who buy and hold will be handsomely rewarded down the road."