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Millennials, Your Avocados are in Good Hands Thanks to This Startup

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It’s no surprise that amongst millennials, avocados and anything to do with them has become a trend.  A California-based startup, Apeel Sciences, creates products from plant-derived materials, which help to eliminate waste and provide high quality fresh products.

When Apeel Sciences was first launched in 2012, the company was funded by the Bill and Melinda Gates Foundation. Since then, it received $33 million in funding back in 2016 from venture capital firm Andreessen Horowitz.

Apeel recently created a product made from leftover plant skins and stems that can be used to slow down the process of decay on different foods and in return, increase the shelf life of these products. The product Apeel created is an invisible and edible coating spray that they say will double the shelf life of avocados.

Since Apeel partners with Costco (COST - Free Report) and Harps Food, they distributed their longer lasting avocados (with the invisible coating) to every Costco and Harps Food store in the nation yesterday. According to Business Insider, Harps Food has 87 locations in the Midwest and Costco, which is a much larger grocery chain, has 500 locations across the country and Puerto Rico. With the debut of this new product at Harps Food and especially Costco, seeing as a lot of people shop there, it could potentially mean a surge of profit for the company.

Since this is the first time any of Apeel’s produce is sold at any store, consumers will likely be intrigued to learn more about the company’s avocados when they see them. This could potentially raise brand awareness and get the company name out there. According to Bloomberg, Apeel made the decision to start off with avocados, because it is a high-profile fruit favored by millennials, and in today’s world, millennials are essentially the ones bringing in business for these startups.

Looking at Costco, the stock is currently a #3 (Hold) on the Zacks Rank, with a VGM score of ‘A’. The company made a comeback in Q3, surpassing analyst expectations on both the top and bottom line. Costco reported quarterly earnings of $1.70 per share, which was a 21.4% increase from $1.40 in the previous reported quarter, while revenues rose just over 12% year-over-year.

Over the past year, its forward P/E has continued to increase. Currently, it is 30.2X, which is fairly high and above the industry average; Costco has also traded higher than the S&P 500 during the same time period. COST is no doubt expensive, but it’s also one of the few major retailers reporting strong earnings on top of even stronger comparable store sales. Investors may be willing to pay a bit more for a popular retailer who is currently raking in the profits.

With Apeel’s product, grocers will be able to save money and preserve produce instead of throwing it away more often. If Apeel’s avocados really do stay fresh for much longer, then this product could really mean big things for the company and the food industry. For Costco, for instance, it could mean more foot traffic and potentially higher revenues. According to Business Insider, James Rogers, the CEO of Apeel, plans to expand the types of produce that is sold. This means that if the invisible coating spray used on the avocados works, Apeel’s future is looking fresh and successful.

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