Is Hostess Brands (TWNK) ready for a run up?

Last week I saw talk about Hostess Brands ($TWNK), it mentioned by someone and the ticker caught my eye. Here is what I found:

  • Hostess was taken public after filing and emerging for bankruptcy in 2012. Since then it has has strong revenue growth over the past 20 quarters.
  • The company is now highly profitable and it has weathered the pandemic well. Gross profit in the past 12 months has been $371 Million, up 39% compared to two years ago.
  • Hostess is funneling much of its profits into its business for future growth. It is also rapidly growing its market share in the Sweet Baked Goods category.
  • The company is in the process of reinventing itself and the products it offers. They have announced plans and capital expenditures to break into the morning convenience food market.
  • They have also recently expanded their leadership team and appointed this absolute stud as their new Chief Growth Officer.
  • Altogether this puts TWNK is in the much-coveted position of being both a value (think Warren buffett) and growth (thing Bill hwang) type stock. At the moment, there is no dividend as the company is reinvesting cash into its business for future growth, but there are plans for future stock buybacks in 2022 and beyond.
  • ANALysts love the stock. The consensus from analysts is Very Bullish (out of the 11 analysts that have covered the stock, 2 TWNK is a strong buy, 6 say its a buy, and 3 say its a hold.

Now let’s talk shorts

  • Short interest is 20.77% of the float That’s higher than most meme tickers here (comparable to AMC GME, much higher than BB, WEN, etc). Furthermore, short interest has increased 44% since the start of January are we’re starting to see a number of pops this spring from failed to deliver shares.
  • The stock has very low volume right now (only an average of 1.2M shares traded per day). If a squeeze were to happen, at the current volume it would take shorts a month to cover.
  • Additionally, 123.67% of all the float is held by institutions, and very little by retail meaning that any significant volume will send the stock flying.
  • If TWNK turns into a crusade against shorty, I could see us squeezing to $69. Right the stock is only at a 2B market cap so there’s plenty of room to grow