In this series, I cover my trades and what I’m doing in the market.
This execution memo is a quick one because I’ve been really busy; but I’ve also been doing some buying again. Mainly in a name I’ve covered earlier: Turning Point Brands ($TPB).
Turning Point Brands: From Vision to Results
Last year I wrote that Turning Point Brands was an interesting stock. That was when nicotine pouches represented only a few percent of their total revenue.
Now, roughly a year later, things have changed dramatically. Nicotine pouches make up around one-fourth of total revenue. That means they’ve added over 100 million USD in revenue in just a year; an impressive shift by any standard.
The Thesis
The thesis is quite simple. You have a superior product in a massive market; nicotine pouches in the U.S. Then you have Turning Point Brands with two products, FRE and ALP. Both show clear differentiation and have built a practical following among users.
This gives TPB a strong foundation for long-term growth. They already have solid distribution channels and a management team that understands execution.
On top of that, the Tucker Carlson partnership adds a powerful marketing edge and broadens brand exposure beyond traditional channels.
Valuation and Market Perception
To put it in rough Fermi numbers, I see the U.S. nicotine pouch market heading toward 40 billion USD within the next 10 to 20 years. I also think there’s a strong chance that TPB captures a meaningful share of that market; possibly even above 20%.
Combine that with decent margins, and it becomes clear why TPB’s current valuation looks low. The company is severely under-discovered; it’s still largely owned by value investors, when in reality, it’s a growth story hiding in plain sight.
What I Did
I’ve been buying a combination of stock and options after the share price pulled back from its highs. I believe the upcoming earnings will bring the TPB story into the mainstream.
The options still look relatively cheap, although not very far-dated. This creates an opportunity to position with both stock and calls for maximum upside potential into earnings; where I think they’re likely to raise guidance again, following their previous increase.
Final Notes
That’s all I have time to cover about my latest addition to the portfolio. This is the second time I’ve entered the name. The last time, I exited because I needed liquidity.
Now, I plan to hold until the story gains traction and the market starts to recognize what’s unfolding here. I’ll be writing a deep dive on the stock in the coming weeks.
If you want to learn more about the company today, check out my previous pitch
The Pitch: Turning Point Brands’ Bet Against ZYN’s Monopoly
I’ve been scouring the nicotine pouch investment space for the past year, and in reality only two names consistently stand out: $HAYPP and $TPB. My past predictions on nicotine pouch sales have been surprisingly accurate over the last two quarters, which makes it appropriate to take a step back and lay out how I see Turning Point Brands today.
article where I first outlined the case for TPB.
Disclaimer
This memo is for informational purposes only and reflects my personal opinions and actions in the market. It is not financial advice. Always do your own research before making investment decisions.