Tuesday, 7 August 2007

The Howard Group Grows Organically

The Howard Group is very pleased to announce Planet Organic Health Corp (TSX V: POH - current $2.50 ) is the newest addition to HG's client portfolio. We anticipate the company will be well received as we work to expand its following within the investment and investing communities.
In our opinion, POH is not only a growth story but it plays into people's emotions, which is critical for broad public acceptance. POH is a leading Canadian natural and organic food products retailer and also sells vitamins, supplements and personal care products.

Currently, it operates 8 natural food supermarkets under the Planet Organic Market food banner. The company also operates 50 natural health outlets under the name Sangster's Health Centre, 7 natural health outlets under the name Healthy's and owns Trophic Canada, which is Canada's leading manufacturer of natural supplements.

In addition to the 64 stores it has in Canada, POH recently acquired Mrs. Green's Natural Market. This gives Planet Organic 11 locations, which are clustered in Connecticut and New York. Of interest is that one of the Mrs. Green's stores is located near Wall St. and some of HG's New York contacts shop at the store. We were glad to hear that the Mrs. Green's name is a familiar one as it makes the POH story that much more relevant for members of the investment community in those areas. This acquisition also leverages POH for additional U.S. expansion.

Planet Organic went public in 2001 and in that time has increased sales from $1.6 million to an estimated $58.4 million for Fiscal 2007 (June 30) as projected by Pacific International Securities analyst Sheila Broughton in a May 31st research update. She has a 12 month target of $4 on the stock.

Q3F07 (March 31) saw sales of $14.6 million, which was up 44% from the same period of the last fiscal year while EBITDA was up 14% to $1.2 million.

Mrs. Broughton is calling for a hefty increase in sales to slightly in excess of $114 million, EBITDA of $11.8 million and Earnings of $5.5 million for Fiscal 2008. There are just over 31 million shares issued.
Interestingly, Chairman and CEO Ron Francisco owns 61% of the stock and other members of management and directors another 19%.

Clearly, the team has a substantial vested interest in growing the company and its market value with 80% of the stock under its control. On the other side, this could make it more difficult for institutions to accumulate large positions. However, POH's share structure is well suited for the retail investor who for the most part can relate to the business.

In our view, Planet Organic Health Corp. is a company for our times. People have shown they are more than willing to spend a little bit more for quality, which is evident simply on the fact that POH same store sales have increased 13% over the past year.

Our Planet Revolves Around People is typical of the messaging you will find at the Company's website www:planetorganic.ca with its "Good For You" and "Good For The Earth" sections amongst others.

Planet Organic is a feel good story that happens to be expanding and turning out good numbers, which makes everyone happy.

It would be a mistake to think that it's only people who wear Birkenstocks and Tilley hats who will relate to this story. Look at the parking lot and you'll see everything from SMART cars to moms in vans and dads in BMW's.

We'll be writing much more about Planet Organic in the coming weeks and the size of its potential market and how it's making a name for itself.

But for now, it's time for a fresh veggie and organic dip break.