Why this ASX small-cap share should be on everyone's watchlist

The share price of meal kit delivery company Marley Spoon AG (ASX: MMM) has surged almost 400% in a couple of months as demand for its products surges during global lockdowns.

| More on:

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

The share price of ASX meal kit delivery service Marley Spoon AG (ASX: MMM) jumped over 10% higher to $1.20 on Tuesday after the company reported that it had successfully completed a $16.6 million oversubscribed share placement.

The ASX small-cap has been one of the best shares to own during the coronavirus crisis with its share price soaring almost 400% higher in the space of just a couple of months. It is one of a small number of companies that have actually seen demand for their products and services surge during nationwide lockdowns.

Marley Spoon is a food delivery service with a global presence. Customers can select from a number of different meal options each week, and then the company delivers the fresh ingredients and recipes required to make them. Marley Spoon claims that their service reduces food waste and also promotes healthy eating. Ingredients are pre-portioned so that only the quantity required to make each recipe is included and there is no excess.

With restaurants closed and people urged to stay indoors as much as possible, Marley Spoon's meal kit deliveries are in high demand. They are more cost-effective than deliveries from restaurants, and they remove the need for extra trips to the supermarket. They also make sense as a meal solution for families who are spending much more time together indoors amid the social restrictions. Parents can teach their kids some cooking skills while ensuring they get a balanced diet.

In its recent quarterly update for the 3 months ending 31 March 2020, Marley Spoon reported a 46% increase in quarterly revenues over the prior corresponding period to a little over €42 million. Most of the surge in demand had occurred in just the last few weeks in the quarter, around the time many countries were implementing strict lockdowns.

And because Marley Spoon's meal kit deliveries are so well suited to the unique demands caused by the COVID-19 crisis, the recent influx of customers has come at much lower marketing costs, accelerating the company's path towards profitability. Whereas for the March quarter FY19 marketing expenses were equal to 41% of revenues, this time around they made up just 27% of revenues.

Should you invest in Marley Spoon?

The risk with Marley Spoon is that this surge in demand – and revenues – will be temporary. Once people are able to freely go outside and more small restaurants and cafes are able to open up again, customer numbers could plateau or decline. However, the path back to normality is still incredibly uncertain in most countries.

As we all collectively shift to a coronavirus-impacted economy, companies like Marley Spoon are uniquely positioned to meet these changing consumer demands.

Add it to the growing watchlist of previously under-the-radar companies like technology and telecommunications small-cap MNF Group Ltd (ASX: MNF) and software developer Objective Corporation Limited (ASX: OCL) that have the potential to thrive in this "new normal".

Should you invest $1,000 in Cochlear Limited right now?

Before you buy Cochlear Limited shares, consider this:

Motley Fool investing expert Scott Phillips just revealed what he believes are the 5 best stocks for investors to buy right now... and Cochlear Limited wasn't one of them.

The online investing service he’s run for over a decade, Motley Fool Share Advisor, has provided thousands of paying members with stock picks that have doubled, tripled or even more.*

And right now, Scott thinks there are 5 stocks that may be better buys...

See The 5 Stocks *Returns as of 30 April 2025

Rhys Brock has no position in any of the stocks mentioned. The Motley Fool Australia's parent company Motley Fool Holdings Inc. owns shares of MNF Group Limited and Objective Limited. The Motley Fool Australia has recommended MNF Group Limited. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

More on Growth Shares

A businessman compares the growth trajectory of property versus shares.
Growth Shares

Are these 2 top ASX growth shares buys?

ASX growth shares can deliver strong results. Should these stocks be in your portfolio?

Read more »

A man clenches his fists in excitement as gold coins fall from the sky.
Growth Shares

These ASX growth stocks could rise 80% to 100%

Let's see what brokers are tipping as buys with big return potential.

Read more »

Man holding a tray of burritos, symbolising the Guzman share price.
Share Market News

Wingstop mania hits Sydney — is Guzman y Gomez next in line to soar?

Can Guzman y Gomez be Australia’s next fast food success story on the ASX?

Read more »

A smiling woman sits in a cafe reading a story on her phone about Rio Tinto and drinking a coffee with a laptop open in front of her.
Growth Shares

3 ASX shares for beginners to buy with $500

These shares are highly rated by analysts. Let's see why they could be top picks for beginners.

Read more »

Hand holding Australian dollar (AUD) bills, symbolising ex dividend day. Passive income.
Growth Shares

Invest $5,000 into these excellent ASX growth shares

These shares could be top picks for growth investors. Let's find out why.

Read more »

three businessmen high five each other outside an office building with graphic images of graphs and metrics superimposed on the shot.
Growth Shares

3 ASX 200 shares that are up more than 30% in a month. Can they go higher?

Are there more gains ahead for these shares? Let's find out.

Read more »

Two people toss papers in the air in joy.
Growth Shares

5 ASX shares for growth investors to buy with $10,000 in May

Analysts are saying good things about these shares. Let's see what they recommend as buys.

Read more »

a man in a business suite throws his arms open wide above his head and raises his face with his mouth open in celebration in front of a background of an illuminated board tracking stock market movements.
Growth Shares

The ultimate ASX growth shares to buy and hold for the next bull market

Brokers think these shares could be great long term investment options right now.

Read more »