Shares in the latest hopeful star of tomorrow Oliver's Real Food Ltd (ASX: ASX) have been volatile since hitting the ASX boards recently and hit an all-time high of 36 cents today.
The company issued shares at 30 cents each at the public offer stage and claims to be the world's first certified organic fast food chain as it attempts to cash in on the global mega-trend that is healthy eating.
If you've not heard of Oliver's Real Food before, you're probably not alone, as it only has 20 locations on "arterial highways of Australia" that cater mainly to hungry and healthy minded travellers.
The company will raise $30 million to fund aggressive rollout plans for 40 more roadside eateries across Australia's eastern seabord.
Promisingly, it's already profitable and posted a net profit of $624,000 in financial year 2016 on revenues of $17.2 million. However, financial year 2017 is expected to swing to a loss of $2.4 million due to costs around the IPO and capital investments.
If everything goes to plan though FY 2018 will deliver a profit of $2.4 million. The company also has some debt, although its founders will retain a substantial amount of shares as they look to execute on the group's ambitions.
It looks an interesting business in a growing market, but anyone who has ever driven the highways of Australia will not have failed to notice that it's not a nation short of drive-thru style fast food offerings such as McDonalds, KFC, Subway, Pizza Hut, Domino's, Mad Mex, Oporto and Sumo Salad to name just a few.
Evidently, Oliver's Real Food is in a competitive space against some powerful rivals and whether it can grow profits to plan will largely depend on how well it can leverage the growing demand for healthy foods.
3 ways to really profit from the healthy eating mega trend
Other more established business in the health foods space include a2-only-protein dairy business the a2 Milk Company Ltd (ASX: A2M), fruit grower Costa Group Holdings Ltd (ASX: CGC) and gluten-free foods business Freedom Foods Group Ltd (ASX: FNP).
Over the past three years their shares are up 648%, 125% and 66% respectively.
Healthy Returns: Chart: 3-year share price performance of a2 Milk, Costa Group & Freedom Foods.
Companies capitalising on the health foods tailwinds offer some big growth potential and all three of the above may offer investors strong returns over the next three to five years.
