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On February 5th Flowers Foods (FLO) will announce their latest quarterly results. I expect the results to be good as the company updated 2008 guidance which was announced as recently as early December, and the company has a good record of managing Wall Street's expectations. In our current environment of lower results and cloudier forecasts, I expect Flowers to be relatively upbeat about their 2009 results.

In the interest of full disclosure, and humility, I first became interested in FLO last spring during the rampant increases in commodity prices. Food costs were skyrocketing along with diesel prices and Flowers' competitors were reporting terrible results as input costs were far exceeding the ability to raise prices. Flowers was still selling at an all time high and hadn't seen any impact of the stock market pull back. I expected that increased costs would affect their earnings as they had their competitors and net income would drop below expectations.

I bet against Flowers. The company announced record sales, earnings, and raised the quarterly dividend. I lost money. But I was impressed by a management that could outperform an entire industry. I decided to keep watching and waiting for an opportunity to buy FLO and recoup some of my losses.

Several quarters have elapsed and the results have been the same. Management has continued to deliver the results in an economy that has grown more difficult. Forbes Magazine recognized the same and named Flowers the best food company of 2008.

The company is forecasting net income, for 2008, of between $1.22 and $1.26 and 2009 net of between $1.33 and $1.45. Earnings will grow at an estimated 12% rate and the company's forward P/E is only 15. FLO's ROE is 16%, debt-to-equity isn't excessive at .43, and they pay a dividend that yields 2.5%.

Best of all, Flowers can be purchased now for $21.50. It sold not too many weeks ago at around $30. Yes, most stocks are not selling for anywhere near all time highs, but, also, most companies are not increasing earnings and forecasting continued growth. Flowers' management has proved, through performance in tough times, that they are a company worth investing in. The recent stock price decline has given investors an opportunity. FLO isn't cheap, nor is it expensive. It remains a growth stock that is now selling for a very reasonable price. The price, could decrease from its present level, but people will continue to eat bread and this management knows how to bake it into profits.

Disclosure: William Kabourek owns shares of FLO

Source: Expect Rosy Earnings from Flowers Foods