Broker Recommendation 20230203: Freshpet

*One Stock Before the Bell*

*Freshpet Inc (Nasdaq: FRPT)*
$65.92 (24.92% YTD)

Freshpet sells pet food products. It stands out by selling fresh, refrigerated pet food rather than dry kibble. Pet food are typically *repeat purchases that are bought at regular intervals*. This gives Freshpet a *stable revenue stream*. According to the *American Pet Products Association*, around *$50B was spent on pet food & treats*, up by 13.6% YoY. Pet food can be a *recession-proof market* as pet owners are willing to spend on their furry companions in both goods and bad times because they are *viewed as a family member rather than just a pet.*

The firm has seen net sales grow by a *CAGR of 35% since 2010*. The stock looks undervalued at a *Enterprise Value/Revenue ratio of 3.1x*, a *49% discount* to its 5Y average EV/Rev. In the long-run, *rising pet ownership* and *greater awareness on pet wellness* should help accelerate pet food sales.