Growing earnings fast

Taste Holdings had a similar range: "A review of the financial results for the year ended 28 February 2014 by management has indicated that the earnings per share and the headline earnings per share are expected to be between 17% and 23% higher, compared to the earnings per share of 12.8 cents and the headline earnings per share of 13.3 cents for the year ended 28 February 2013." The stock trades at 380 cents, down 10 cents yesterday. With EPS expected at 15.4 cents in the middle for the range, Taste trades on a historical 24.7 multiple and a PEG of 1.23 times. Those are often used to see if these companies are just expensive, but what matters most are their prospects from here if you are considering buying them (Famous Brands too). Let us be clear, we think that the sector, casual dining is a fabulous investment in emerging markets. It is part of the broader aspirational consumerism theme that we like.


Taste of course have recently announced that they have signed an exclusive 30 year Master Franchise agreement with Domino's Pizza. The existing Scooters and St. Elmo's stores will be converted. As at 31 May 2013 (a year ago), there were 132 Scooters and 26 St. Elmo's stores, I presume that there are more now. But that already gives the brand here locally a major presence. I have no doubt that Taste are going to grow aggressively off admittedly a much lower base than Famous Brands.

Both these businesses have energetic management teams who are invested in their respective businesses, and as such have as much to gain as you. Darren Hele is a new appointment as CEO (Kevin Hedderwick is now Group CEO) and is a young fellow, by running listed business standards. He is 41 years old according to Bloomberg. Carlo Gonzaga, the Taste CEO is only 39 according to Bloomberg and has been at the business since the beginning in 2000. He is energetic and entrepreneurial in nature, everything you want when investing in a smaller business, relative of course. Both these businesses have experienced rapid growth over the last decade and will continue to do better as the middle income segment across the continent grows, outpacing global middle income growth. Soft luxury, very good.