Penny Stock Alert: UFood Restaurant Group (UFFC)

When screening for penny stocks to buy now, one never knows what one might find. This penny stock to watch has already fed into the fast food giant McDonalds, Inc. (NYSE: MCD) growth-by-acquisition strategy before by being acquired for $173.5 million. McDonald’s may have purchased the 751 restaurants, rights to another 108 franchise locations and the brand name, but they didn’t acquire the founder of the company. That founder is at it again in the multi-billion dollar restaurant industry and, this time, he won’t make the mistakes he made before.

Put UFood Restaurant Group, Inc. (OTC: UFFC.OB) on your radar immediately. UFFC is extremely undervalued at its current trading level. George Naddaff is the Chairman and Chief Executive Officer of UFFC. The same George Naddaff that started and created the fast-food giant Boston Market more than two decades ago. UFFC has already seen gains since late December of over 300% and is currently trading at .106. But this isn’t just a chart play on this penny stock. After having read through the company’s most recent 10-Q from the quarter ended October 2, 2011 (MRQ), UFFC is so close to becoming a positive EPS reporting penny stock which everyone knows is a rare sight.

UFFC owns a mere 4 stores and reports franchise income from 0 stores as of their MRQ. Their same store sales dropped slightly for the same quarter in 2010 ever so slightly to $1.058 million for the three months ended compared to $1.179 million from the year before which is attributed to the economic crisis in the U.S. That said, the EPS for the MRQ was -0.01 compared to -0.05 for the same quarter 2010.

Since their MRQ filing, UFFC has announced a number of both franchise rights licensing agreements and joint partnerships which will add to the already established revenue stream the company has from its 4 pre-existing stores. Recent news releases show that UFFC is rapidly expanding with a 26 unit agreement with the United States Military, two units at the Salt Lake City airport and 10 additional units in Western Canada. More interesting is the warrant options which UFFC carries on its books, 6,775,815 to be exact as of their MRQ, all exercisable at $0.19. That indicates that UFFC is trading at a discount currently of 8.4 cents a share – an almost 80% discount.

Boston Market made the ultimate mistake when it first started by trying to be a dinner place which didn’t work. After incurring the costs of converting the restaurant chain into a lunch-type restaurant, Naddaff’s Boston Market was consumed by debt and eventually purchased by McDonalds. This time, Naddaff has approached the market place with a much stronger concept. The UFFC restaurants provide health-conscious meals for an affordable price even offering the “less than 500 calorie” menu as well as “buy one get one free” promotion for college students.

Currently, there is very little resistance between UFFC’s current level of .106 and .13, which is about 22% from here. The last time UFFC saw any type of significant volume, the price per share jumped 36% in a day. Although there are 40.15 Million shares in the Float, UFFC has been trading in a fairly tight range between .14 and .05 since early 2011 on fairly low volume. The low volume can be attributed to the fact that not too many people are aware of UFFC right now. UFFC has not been trading for too long and has not participated in any type of significant exposure campaign.

UFFC 3 Month Stock Chart:


Any type of positive new announcement that could bring exposure and interest into UFFC could send it out of this range. History has proven this.

UFFC’s flagship restaurant, UFood Grill, offers a healthy lifestyle alternative to consumers in the fast-casual restaurant space, and is positioned to become a leading player in the “better-for-you” quick-serve restaurant category. Simply put, they sell food you know and love (burgers, fries, sirloin tips, wraps, salads and paninis), cooked in a healthier way. Their food is baked, steamed, or grilled, but never, ever fried. They use natural and organic ingredients whenever possible as well as whole grains, light cheeses and dressings. Their produce is fresh, their steak tips are grass-fed, and their burgers are 100% USDA lean.

UFFC CEO George Naddaff is known as the “guru of franchising” and founded Boston Chicken. President and COO Charlie Cocotas has decades of experience in leadership positions with brands like Boston Chicken, Dairy Queen, Church’s Fried Chicken and TCBY, among others. They both lead a seasoned management team of industry experts, chefs and nutritional advisors who know the importance of making healthy eating taste great.

Add UFFC to your watch list immediately and begin your due diligence on the stock here:

UFFC is fairly low priced and has a history of moving on low volume and even more on significant volume. Make sure that you play close attention and always – Plan your trade and trade your plan.

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