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Why Whole Earth Brands Stock Jumped 31.5% in December

By Rich Duprey - Jan 6, 2021 at 9:33AM

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Investors became sweet on this natural-sweetener leader as it built out its portfolio.

What happened

Shares of Whole Earth Brands ( FREE 0.67% ) soared 31.5% in December, according to data provided by S&P Global Market Intelligence, a rally that began in earnest after analysts at Cantor Fitzgerald initiated coverage of the stock with an overweight rating and a $23 per share price target.

So what

Cantor Fitzgerald analyst Pablo Zuanic sees Whole Earth as similar to Beyond Meat and Freshpet because of its focus on the better-for-you category of natural alternatives.

Swerve brand sweeteners and bake mixes

Image source: SwerveSweet.

As if to underscore its agreement with that outlook, Whole Earth Brands followed up with an announcement it had acquired Wholesome Brands, an organic sweetener. It comes after its recent acquisition of Swerve, a manufacturer of sweeteners and baking mixes that have zero sugar and are said to be keto-friendly.

Now what

Natural sweeteners represent approximately 87% of Whole Earth Brands' consumer packaged goods (CPG) sales mix in the U.S. and 72% globally.

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D.A. Davidson analyst Brian Holland says the CPG segment is a viable play on growing consumer interest in reduced sugar intake and natural substitutes, while its flavors and ingredients segment will be what provides the company with profit and cash. He set a $16 share price target.

Both analysts see large potential upside from the business, meaning the 10% pullback in its stock from its December peak could be seen as a buying opportunity.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium advisory service. 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.

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