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Stock of the Month: Advantage Solutions

Written by Donnie Nguyen

September 15, 2020

The September 2020 stock of the month is Advantage Solutions, the market leader in Sales and Marketing business services. Technically, Advantage Solutions is still a private company.

To go public, it is in the process of merging with a SPAC called Conyers Park II Acquisition Corp. (NASDAQ: CPAA). SPACs are special purpose acquisition companies whose sole purpose is to acquire another company and take them public. You can check out my video on SPACs for a brief overview.

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CPAA’s closing stock price at the time of this stock pick (September 11, 2020) was $10.25. The merger is expected to complete in late October. After the merger, the ticker symbol will change from CPAA to a new ticker symbol yet to be determined.

This article was originally posted on September 12, 2020. Updated on September 15, 2020, to include the video. 

WHO IS ADVANTAGE SOLUTIONS?

Since you’re reading an investment blog, chances are, you’ve heard of the FIRE movement (financial independence retire early). One way people try to achieve FIRE is through frugal living.

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Have you ever thought, what would a frugal, FIRE movement person do to save money on dinner? Hey, I know, let’s go to Costco and eat all the food samples. We’ll save $20 to $30. Early retirement, here we come! I’ve never done it myself, but I’ll admit, I have thought about it. Advantage Solutions makes it all possible.

Based in Irvine, CA, Advantage Solutions is the exclusive provider of sampling services at retailers like Costco, Walmart, Target, Kroger, Whole Foods, and Albertsons, among others. Advantage Solutions was founded in 1987 by Sonny King, a thirty-year veteran at Vons. With only two clients and a small amount of seed money from his retirement, his vision was to build a nationwide retail sales organization.

Three decades later, Advantage has become one of the largest sales and marketing agencies in the U.S. They represent some of the world’s most recognized brands and offer a wide range of advertising and marketing services. In addition to in-store merchandising and experiential events, they offer digital, social marketing, and e-commerce solutions. They’ve also expanded internationally to Africa, Asia, Europe, South America, and Oceania.

In this video, I cover 5 reasons why I’m investing in Advantage Solutions via the CPAA SPAC.

  1. Sales and Marketing Services Leader
  2. Strong Company Leadership
  3. Durable Growth Strategy
  4. Using Proceeds to Reduce Debt
  5. Successful SPAC Track Record (Conyers Park Acquisition 1)

SHOULD I BUY THIS STOCK?

Advantage Solutions could be a good addition to a portfolio that wants exposure to:

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  • Outsourced Business Services Industry (Sales and Marketing)
  • Mid Cap Growth Stocks

Be sure to do your own research and determine if Advantage Solutions is a good stock for your portfolio.

 

HOW MUCH OF THIS STOCK SHOULD I BUY?

Here are some portfolio guidelines we Wolves try to live by:

  • Thou shalt not hold more than 35% in any one particular sector
  • Thou shalt not invest more than 10% of principal into one individual stock
  • Thou shalt make small purchases. The general rule of thumb is to spend no more than 2% of your portfolio on a single purchase and build up your position over time.

These portfolio guidelines have helped me tremendously through my 20+ years of investing.

BOTTOM LINE

Advantage Solutions is the market leader in outsourced sales and marketing business services. It is going public by merging with a SPAC, Conyers Park II Acquisition Corp. It’s led by CEO, Tonya Domier. The SPAC leadership team has a track record of success, most recently with The Simply Good Foods Company (NASDAQ: SMPL). SMPL’s stock price has gained over 100% in three and a half years since its merger with Conyers Park I.

So what do you think about Advantage Solutions? Let me know in the comments section.

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Disclosure

I/we own shares of CPAA

Except for Wolves of Investing, I/we are not receiving any compensation from and do not have any business dealings with any companies whose stocks are discussed in this article.

DISCLAIMER: I'm not a financial advisor. These are my opinions and provided "as-is". It is not an offer to buy or sell securities. Read the Terms and Conditions.

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Donnie Nguyen

Donnie Nguyen

Donnie Nguyen is the founder and CEO of Wolves of Investing. He started investing in the stock market in the early 2000s. He follows the teachings of Peter Lynch, Warren Buffett, and other investing legends. When he's not investing or blogging, he loves spending time with his family traveling and experiencing the world.

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