Tags: Coronavirus | hostess | twinkies | road | trip

Hostess Twinkies to Get a Boost With More Americans Taking Road Trips

Hostess Twinkies to Get a Boost With More Americans Taking Road Trips
(Adrianadh/Dreamstime)

Monday, 01 June 2020 04:28 PM

Hostess Brands Inc. could be poised to cash-in on the renewed popularity of road trips that are replacing other types of vacations blown off course by the coronavirus.

SunTrust Robinson Humphrey Inc. analyst Bill Chappell wrote in a note Monday that the maker of the iconic Twinkie and Ding Dongs snack cakes will benefit as Americans change their travel plans to focus on destinations within driving distance.

Chappell said he expects provisioning for those trips to include plenty of the pastries marketed under the Hostess banner. He upgraded the Kansas City, Missouri-based company to buy from hold and raised his price target to $16 from $12.

“TWNK will be a direct beneficiary of the spike in 2020 road trips, whether it is through packing snacks for the long drive, or increased visits to c-stores/gas stations on the road,” he wrote, referring to Hostess by its ticker symbol.

A vacation-inspired sales boost could be significant for the company, which went public again after a 2012 bankruptcy. Shares are down about 15% so far this year, steeper than the 10% decline in the Russell 200 Consumer Staples Index.

Even after families are done feasting on snacks while vacationing, Chappell expects Hostess’s ability to quickly package seasonal products and distribute them to stores, plus the acquisition of Voortman Cookies Ltd., to allow continued internal growth in the future.

SunTrust pointed to four straight quarters of sales growth prior to the crisis as evidence of Chief Executive Officer Andrew Callahan’s strategy revamp.

“The worst is clearly behind TWNK in terms of lost sales,” Chappell said. “The stock can be firmly put in the bucket of ‘reopening stocks’ that will see trends improve sequentially as the country reopens.”

© Copyright 2020 Bloomberg News. All rights reserved.


   
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Analyst sees iconic snacks like Twinkies as likely road treats; Strategies enacted by management can create consistent growth
hostess, twinkies, road, trip
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2020-28-01
Monday, 01 June 2020 04:28 PM
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