🚀 Resilient Trader Trade Idea: The Fresh Food Revolution with Freshpet (FRPT)

Resilient Trader is where smart traders come for vetted ideas.

Every week, we cut through the noise and surface opportunities that institutions are already eyeing - but with strategies tailored for retail traders. Today’s setup? A pet food disruptor poised to dominate a booming market.

We’ll cover:

• Why Freshpet is a Buy at current levels

• How to take advantage with defined risk through a call spread

🔍 Trade Thesis: FRPT Is Leading the Pack in the Fresh Food Gold Rush

Freshpet (FRPT) is at the forefront of a massive shift in the $54 billion US pet food market, pioneering the rapidly expanding fresh pet food category. While the stock has seen volatility, we believe the company is set for a significant upward run, fueled by powerful industry trends and solid execution.

Behind the scenes:

📈 Pricing Power Confirmed: Competitor The Farmer's Dog raising prices by 7% validates the entire category's ability to command premium pricing.

💰 Room to Run: The Farmer's Dog is priced at a 15-20% premium to FRPT, giving Freshpet a clear runway for future price increases without sacrificing its value proposition.

🛒 Retail Dominance: Our store checks confirm FRPT is gaining significant cooler space at key retailers like Target and Walmart, boxing out new entrants like General Mills' Love Made Fresh.

👑 Category King: General Mills' entry into the fresh category with a massive launch validates the market's long-term potential and Freshpet's leadership position.

💪 Scale Advantage: FRPT's superior scale leads to better velocity and lower pricing, positioning it to continue capturing market share from both traditional kibble and smaller fresh competitors.

📊 The Fundamentals Are Accelerating

Let’s break it down:

💰 Revenue: Strong and consistent growth, with FY2024 sales hitting $975.2M (+27.2% YoY) and 2025 guidance for 13% growth to $1.1B.

📈 Profitability: FRPT achieved its first-ever profitable year in 2024 with $46.9M in net income. The trend continues with Q3 2025 net income of $101.7M.

💸 Margin Expansion: Adjusted EBITDA margins are on a tear, hitting 16.6% in 2024. The company raised its 2027 target from 18% to a whopping 22%.

💨 Cash Flow Positive: The company achieved positive free cash flow in Q3 2025 and now expects to be FCF positive for the full year 2025-a year ahead of schedule!

📐 Valuation: Premium Justified by Growth

FRPT is priced for growth, and it's delivering:

⚖️ EV/Sales: 3.4x vs. legacy pet food players at 1.4x. The premium is warranted given FRPT's 14% revenue growth compared to the 2-5% of competitors like General Mills.

🏷️ Gross Margin: A healthy 40%+, well above the 30-35% industry average for traditional pet food.

🚀 P/E Ratio: Trading at a forward P/E of 50x, this reflects the market's expectation of continued high growth and margin expansion.

🧭 Technicals Agree: This Chart Is Ready to Run

✅ Bullish Trend: Price is trading firmly above its key 20, 50, 100, and 200-day moving averages.

✅ Momentum Building: The daily summary shows a BUY signal, with Moving Averages flashing a STRONG BUY.

✅ Room to Move: RSI is a healthy 62.5, indicating bullish momentum without being overbought.

💰 Current price: $66.70

🎯 Targets: $85 (initial), $105 (intermediate)

💥 Trade of the Week: Defined-Risk Call Spread

We’re positioning for a significant move higher with a stock purchase and a defined-risk options trade.

🟢 Trade Setup

• Buy $FRPT ( ▼ 3.28% )  at $66.70

🛡️ Options Play

• Buy the September 18th $85/$105 Call Spread for a $4.00 debit

  • Buy Sept 18th $85 Call: $6.50

  • Sell Sept 18th $105 Call: $2.5

  • Net debit: $4.00

📈 Risk-Reward

• Max Risk: $4.00 per spread

• Max Reward: $16.00 ($20 spread width - $4 debit)

• Breakeven: $89.00 ($85 strike + $4 debit)

• Risk-Reward Ratio: 1:4

🛑 Risk Management Tip

For the stock position, consider a stop-loss below the 50-day moving average, currently around $64. The beauty of the call spread is that your risk is defined to the $4.00 you paid for it.

🚀 Catalysts on the Horizon

Keep your eyes on:

1. Q4 Earnings (Feb 23, 2026): Continued strong growth and margin improvement could send the stock soaring.

2. Analyst Upgrades: Piper Sandler just raised their target to $87. More upgrades could follow as the growth story plays out.

3. Market Share Gains: Watch for data showing FRPT taking even more share from both legacy and new fresh competitors.

4. Cooler Expansion: News of more fridge placements in major retailers will fuel the growth narrative.

🧠 Final Thoughts

FRPT is a dominant force in a high-growth category. The company has a clear path to continued growth, margin expansion, and free cash flow generation. The recent entry of large players validates the market, and Freshpet's established moat of refrigerated coolers gives it a powerful competitive advantage.

✅ Buy FRPT at $66.70
💸 Buy the $85/$105 Sept 18th Call Spread for $4.00

We'll be watching this one closely.

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