The Marley Spoon AG (ASX: MMM) share price has surged 1200% in 2020. Despite the meteoric rise in the Marley Spoon share price, the company's shares remain a core holding for this leading fund manager.
Marley Spoon a core holding
Leading fund manager, Perennial Value Management, recently released its monthly microcap report. The report highlighted the performance of its Microcap Opportunities Trust, which was up 10.2% for the month of July.
Perennial's report also revealed that Marley Spoon has been a core holding and the strongest contributor to the trust's performance. The fund manager noted that Marley Spoon exceeded expectations, following the company's earnings update in late July.
The meal kit provider remains a core holding for Perennial, with its strong operating performance supporting the Marley Spoon share price. Analysts from Perennial expected the company's growth rate to fade as economies re-opened.
However, Marley Spoon has seen its growth accelerate in all markets, particularly in the United States. Analysts at Perennial have been impressed by the company's high retention rates and reduced acquisition costs. In addition, Marley Spoon's revenue has been generated at higher margins with the company's cash position also improving.
How has Marley Spoon performed?
Marley Spoon is the second largest, subscription-based meal kit provider in Australia. In its most recent market update, the company reported strong demand for its meal kits in the second quarter of FY20.
Marley Spoon highlighted that the COVID-19 pandemic has contributed to strong growth in its global business. As a result, the company reported a 129% increase in revenue for the second quarter of FY20 to 73.3 million euros.
In addition, Marley Spoon reported positive operating earnings before interest, taxes, depreciation and amortisation (EBITDA) of 4.5 million euros and highlighted lower customer acquisition costs. The company also upgraded its full-year guidance, with at least 70% revenue growth expected in 2020.
Should you buy at today's Marley Spoon share price?
The COVID-19 pandemic has changed consumer behaviour and increased the demand for online and convenience services. In my opinion, the Marley Spoon share price is well positioned to continue benefitting from these changes.
In addition, global market research company, Nielsen, estimates that the market for meal kits is expected to grow rapidly. Marley Spoon is well capitalised to fuel global expansion, with the company having completed a $16.6 million capital raising in May this year.
The fact that a leading fund manager like Perennial has Marley Spoon shares as a core holding should provide investors with extra assurance. However, given the recent rapid rise in the Marley Spoon share price, I think the most prudent strategy would be to wait for the company's full-year results before making an investment decision.
