New Name, Same Old Value

Recipe Unlimited Corporation (TSX:RECP), formerly Cara Operations, is getting rid of straws, just one more reason to buy its stock.

| More on:
chicken dinner

It doesn’t pay to take your eye off the ball; I should know.

I last covered Recipe Unlimited Corporation (TSX:RECP) in March when it was still known as Cara Operations. At the time, I called its stock oversold and predicted it would hit $30 by the end of 2018, a target I feel is still very obtainable.

I then forgot about Cara until I saw a July 4 Financial Post article about the restaurant operator getting rid of plastic straws by 2019, a year ahead of Starbucks Corporation.

It alerted me to the fact Cara was out and Recipe Unlimited was in. In that same article, I discovered that Recipe Unlimited had a new CEO.

“Our goal is to enrich life in Canada…and that extends beyond our restaurants and guests, to our oceans, wildlife and environment,” said Recipe Unlimited’s Chief Executive Officer Frank Hennessey in a statement. “Straws are just one component of the work we’re undertaking to eliminate single use plastics from our supply chain and shift to recyclable or compostable materials wherever possible.”

Who is Frank Hennessy?

That’s what I’d like to know, along with what happened to Bill Gregson, a CEO I’ve followed since his days at Forzani Group, now part of Canadian Tire Corporation, Limited?

It turns out Gregson, who was CEO for almost five years, was booted upstairs to executive chairman with Hennessy dropping into the CEO role.

Hennessy used to work at Cara spending 11 years at the company in various executive roles, including president of Harvey’s. He then left to become CEO of Bento Sushi restaurants before leaving to take the reins of Imvescor Restaurant Group Inc. in September 2014, staying there until MTY Food Group Inc. bought it for $247 million in March.

Needless to say, he has a good track record both inside and outside Recipe Unlimited, making the transition from Gregson an easy one.

New name, same old value

Up until its purchase of Keg Restaurants earlier this year for $230 million, the company formerly known as Cara flew under the radar of many investors, but since that acquisition, it’s been spending a lot more time in the media spotlight given that its largest shareholder, Fairfax Financial Holdings Ltd., upped its voting control in Recipe Unlimited to 57%.

As a fan of Fairfax CEO Prem Watsa, the company’s increased control of the restaurant operator in combination with the Keg acquisition made Recipe Unlimited more attractive stock worth buying whenever it dips, as it did last September.

Up 18% over the past 52 weeks, Recipe Unlimited stock isn’t nearly as cheap as it was a year ago. However, with a healthy financial position and growing cash flow, I look for good things to happen from Recipe Unlimited. 

“With the company’s strong balance sheet and growing cash flows, management will continue to pursue strategic acquisitions and will explore alternatives to return more capital to its shareholders including continuation of its [share buyback program] and increases to the company’s dividend rate,” the company stated in its Q1 2018 press release in May.   

I hate the name, but love the stock.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium service or advisor. We’re Motley! Questioning an investing thesis — even one of our own — helps us all think critically about investing and make decisions that help us become smarter, happier, and richer, so we sometimes publish articles that may not be in line with recommendations, rankings or other content.

Fool contributor Will Ashworth has no position in any stocks mentioned. David Gardner owns shares of Starbucks. Tom Gardner owns shares of Starbucks. The Motley Fool owns shares of MTY Food Group and Starbucks. Starbucks, MTY Food Group and Fairfax are recommendations of Stock Advisor Canada.

More on Investing

concept of real estate evaluation
Stocks for Beginners

2 No-Brainer Real Estate Stocks to Buy Right Now for Less Than $1,000

These two real estate sector-focused stocks have the potential to deliver strong returns on your investments in the coming years.

Read more »

Pumpjack in Alberta Canada
Energy Stocks

Is Enbridge Stock a Buy, Sell, or Hold for 2025?

Enbridge stock just hit a multi-year high.

Read more »

Silver coins fall into a piggy bank.
Dividend Stocks

How to Use Your TFSA to Earn up to $6,000 Per Year in Tax-Free Passive Income

A high return doesn't mean you have to make a high investment -- or a risky one -- especially with…

Read more »

Asset Management
Stock Market

3 of the Best Canadian Stocks to Buy Right Now

Are you looking for stocks that could be a major bargain right now? These three Canadian stocks could provide some…

Read more »

path road success business
Dividend Stocks

2 High-Yield Dividend Stocks to Buy Hand Over Fist and 1 to Avoid

High yields are great and all, but only if returns come with them. And while two of these might, another…

Read more »

construction workers talk on the job site
Metals and Mining Stocks

2 No-Brainer Mining Stocks to Buy With $200 Right Now

You can buy these top Canadian mining stocks with just a $200 investment right now to start your long-term wealth…

Read more »

dividend growth for passive income
Tech Stocks

2 Rapidly Growing Canadian Tech Stocks With Lots More Potential

Celestica (TSX:CLS) and Constellation Software (TSX:CSU) are Canadian tech darlings worth watching in the new year.

Read more »

Man holds Canadian dollars in differing amounts
Dividend Stocks

This 7% Dividend Stock Pays Cash Every Month

A high dividend yield isn't everything. But when it pays out each month and offers this stability, it's worth considering!

Read more »