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Should You Consider Investing in Fat Brands (NASDAQ:FAT)?
Stock Analysis & Ideas

Should You Consider Investing in Fat Brands (NASDAQ:FAT)?

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With 190% upside potential, Penny stock Fat Brands has an Outperform Smart Score on TipRanks. Let’s learn more about FAT stock

Investors planning to park their money in penny stocks can use TipRanks’ penny stock screener to find the ones that are more likely to outperform. Leveraging the tool, we came across Fat Brands (NASDAQ:FAT), which owns multiple quick-service restaurant brands. This penny stock has an Outperform Smart Score rating on TipRanks, with considerable upside potential, making Fat Brands an attractive bet for high-risk investors.

Why Bet on Fat Brands?

The easing of COVID-19 restrictions and the reopening of economies have led to a surge in customer demand. This is reflected in the stellar system-wide sales of the company, which grew 284% in Q2. Further, benefits from acquisitions support its sales. 

Looking ahead, the company expects to deliver solid sales and adjusted EBITDA. Moreover, the opening of new stores is expected to support its organic growth. 

Commenting on Fat Brands’ store opening plan, Noble Financial analyst Joe Gomes said, “FAT reported another 26 restaurants open in the second quarter with 62 opened year-to-date. Management is expecting some 120 units to open in 2022 and the pipeline is now over 900 units, up from a previous 860. Organic growth remains the easiest way for FAT to increase EBITDA, with the pipeline projected to add over $50 million over time.”

Gomes has a Buy recommendation on the stock and a price target of $25, implying 193.4% upside potential. Further, insiders have accumulated FAT stock worth 53.6K in the last three months.

Overall, Fat Brands commands an Outperform Smart Score of eight out of 10 on TipRanks. 

Bottom Line

FAT Brands is well-positioned to benefit from strong demand, accelerated new store openings, and acquisitions. However, investors should note that investing in penny stocks could be risky. Any economic slowdown could significantly impact penny stocks, including Fat Brands.

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