Why has the Pure Foods share price soared 144% in August?

Pure Foods Tasmania's share price has rocketed 144% so far in August? Why is Pure Food's share price surging?

Bernd Struben

Author bio Bernd Struben earned his BA in economics from the University of Michigan in 1991, with post-graduate studies in environmental economics at the University of Connecticut. Over the years he’s written about and analysed the tourism industry in the Caribbean; Europe’s commercial real estate markets; and, since moving to Australia in 2010, global and Aussie share markets. Bernd studies geopolitical and macroeconomic trends, alongside sector and company specific data, to gauge what he believes could be tomorrow's best investments. In his free time, you might find Bernd at the beach with his family or working on his next science fiction novel. Areas of expertise Australian and global share markets Macroeconomic and geopolitical trends Real estate Education Economics, University of Michigan Favorite investment quote "The four most dangerous words in investing are: 'This time it's different." — Sir John Templeton

Published August 20, 2020 6:06 pm AEST

The Pure Foods Tasmania Ltd (ASX: PFT) share price has rocketed 144% higher so far in August. That gain represents the lion's share of Pure Foods' 154% share price gain since listing on the ASX on 30 April.

By comparison, the All Ordinaries (INDEXASX: XAO) has gained 3.5% in August and 12% since April 30.

Pure Food's remarkable August share price surge comes despite Thursday's 12% fall, likely driven by some profit taking.

At the current share price of 64 cents per share, the company has a market cap of $36 million.

What does Pure Foods do?

Pure Foods Tasmania was formed in 2015 and began trading on the ASX in April 2020.

The company's business strategy is to acquire and develop premium Tasmanian food businesses. Today Pure Foods has acquired two businesses, held through separate wholly owned subsidiaries. Tasmanian Pate, which supplies numerous big brand chains such as Aldi, Woolworths and Costco. And Woodbridge, which produces premium Tasmanian smoked salmon and trout.

Why has the Pure Foods share price leaped 144% in August

Pure Foods shares began trending strongly higher on the first trading day of August. That followed on the release of its quarterly performance report for the quarter ending June 30, released to the market on 30 July.

The report noted that Pure Foods was on track to deliver annual revenue growth of 22% compared to the 2019 financial year. The company also noted that export sales remained firm, despite disruptions from COVID-19 and trade frictions with China. The company also announced the pending launch of its online store.

The Pure Foods share price really took off following an ASX announcement released on 6 August. That stated that Pure Foods was going to launch a new range of 3 Tasmanian Pates into 850 Woolworths stores across Australia. Those will be available from mid-October. Pure Foods estimated the addition of these 3 products would increase its sales by 35%.

Managing Director, Michael Cooper said:

This is a great credit to the team at PFT working with Woolworths to develop a first for the pate category. We believe these new products are unique and aligns with our strategy to produce great tasting premium food using 100% Tasmanian ingredients where possible.

Pure Foods' share price has gained 72% since the announcement on 6 August.

Automatic Renewal

By taking up this offer, you will also be enrolled in our auto-renewal program, which is our way of making your ongoing subscription easier by ensuring uninterrupted service. Don't worry, though – you're not locked in, and can cancel your auto-renewal at any time before each 'anniversary' date without question or penalty.