Why the Yowie Group Ltd share price is rampaging higher today

Shares in small-cap chocolatier Yowie Group Ltd (ASX: YOW) jumped 10% to $0.66 today after the company released a non-market sensitive announcement regarding its progress at ramping up its chocolate production.

Yowie announced that it had completed production of its Angry Birds chocolates and that those were being distributed to retailers in order to capitalise on the lead-up to the Angry Birds film in May 2016. Production of Yowie chocolates has now commenced.

Yowie’s executive chairman, Wayne Loxton, stated: “We are pleased with the seamless transition to the new manufacturing facility and look forward to continuing to meet the future requirements of our growing customer base.”

The sudden shift to the Madeleine production facility in New York was one of the key risks facing the company, with some investors fearing either that Yowie would hit a snag during the transition process, or that it would incur the wrath of customers by running out of product. Fortunately, neither of these possibilities eventuated.

What’s next?

Yowie’s task now is to continue to build its market presence and sales. Already the chocolate is the eighth most popular candy item by dollar value sales performance for the three months to 26 December 2015, according to Nielsen scan data.

Hopefully the Angry Birds chocolate will build on Yowie’s reputation both among potential business customers, and among consumers who may notice the parallels between Yowie wrapping and the wrappings used for Angry Birds chocolates.

Remaining key risks for Yowie are the litigation against Whetstone, the grant or rejection of its pending patent application, and the need to retain major clients and please consumers.

Yowie has US$11.5 million in cash as of 31 December 2015, compared to a virtually neutral (excluding funds raised from options) cash flow during that time. Although the next market update will likely see a sharp rise in working capital requirements, as well as one-off costs associated with the change of production facilities, Yowie appears well funded.

Nevertheless, there is still significant risk associated with a purchase of Yowie today.

Investors looking for another highly successful business should check out The Motley Fool's Top Stock pick for 2016, a profitable technology company in an industry that insiders are calling one of the biggest new markets in the history of modern business...

To discover this industry AND our top stock pick, simply click here, enter your email address, and we'll send you our full coverage for free - no credit card details or payment required! What are you waiting for?

Motley Fool contributor Sean O'Neill owns shares of Yowie Group Ltd.. The Motley Fool Australia has no position in any of the stocks mentioned. 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 Bruce Jackson.

Two New Stock Picks Every Month!

Not to alarm you, but you’re about to miss a very important event! Chief Investment Advisor Scott Phillips and his team at Motley Fool Share Advisor are about to reveal their latest official stock recommendation. The premium “buy alert” will be unveiled to members and you can be among the first to act on the tip.

Don’t let this opportunity pass you by – this is your chance to get in early!

Simply enter your email now to find out how you can get instant access.

By clicking this button, you agree to our Terms of Service and Privacy Policy. We will use your email address only to keep you informed about updates to our website and about other products and services we think might interest you. You can unsubscribe from Take Stock at anytime. Please refer to our Financial Services Guide (FSG) for more information.