Ingles Markets (NASDAQ:IMKTA)

[Sold as of Q2 2021 for a total gain of +46%.]

Date: Dec. 28, 2020

Original notes:

• Small, geographically optimized retail chain in Southeastern USA
• Sells high-margin products, including fresh local produce and pre-packaged meals
• Stable, continuously increasing revenue over the past decade (avg. 2.5% per year pre-2020)
• Increasing net income over the past decade (avg. 11% per year pre-2020)
• Positively affected by increased demand due to COVID-19 due to restaurants being closed
• High recent profits from selling high-margin pre-packaged food
• Only a single quarter of negative EPS since 2006
• Deployed majority of 2020 cash influx to pay off large portion of long-term debt
• Executives reside in the same region as the company
• 76% of voting power controlled by current Chairman Robert P. Ingle II (son of founder Robert P. Ingle)
• Too small to compete with a big retailer like Walmart (Ingles 2020 Revenue: $4.6M, Walmart 2020 Revenue: $523M)
• Local distribution network allows for timely transfer of inventory between all company locations
• 10-year DCF (FCF): $1-2B
• Current market cap: $820M
• Working capital: $147M
• Shareholder's equity: $819M
• Target market cap: $1.2-1.5B
• 30-45% margin of safety

Original data sheet