Food Technology Service: Momentum Growth Stock

Apr.14.09 | About: Food Technology (VIFL)

VIFL reported earnings for the Fiscal Year 2008 last week.

Growth Highlights:

  • Sales - 20% Year over Year growth & 29% Quarter over Quarter growth
  • Net Income - 115% Year over Year Growth & 422% Quarter over Quarter growth

Potential Catalysts for VIFL to be a small cap momentum runner in 2009 (Like prior super-trades runners EFUT, PDO, NTI etc.):

1) Continued Growth: From the 10-K Filed 3/30/09

Management attributes increased revenue to continuing growth of base customers requiring irradiation of products on a regular basis. The majority of revenue growth is occurring in medical sterilization but the Company remains well-positioned for any increased interest in food irradiation.

Although there is no assurance, management anticipates continued profitability during 2009. Management does not anticipate any significant increases in actual processing costs or general and administrative expenses during 2009.

During the past few years, the Company has aggressively pursued sterilization of medical devices to increase its customer base. Medical device manufacturing is expanding rapidly due to improvements in medical technology and an aging population structure in the U.S. The Company is certified to International Organization for Standardization (ISO) standards for radiation sterilization of medical devices, which is especially important for potential customers exporting medical products to the EU and Canada. Medical device sterilization represented approximately 70% of revenues in 2008. The State of Florida is now the second leading state in the U.S. for FDA registered medical device companies.

2) Strong Growth / Acceptance in Food Irradiation or Food Safety Headlines:

Just this week there were salmonella recalls in pistachios, pepper, and mayonnaise. The new administration is setting up a food safety board.

I just found this yesterday and if true this could be huge for VIFL:

"Irradiation zealot" may get top food safety spot. There's a possibility that former Monsanto executive Michael Taylor and irradiation proponent Dr. Michael Osterholm will be named to top food safety spots in the new Administration.

On Monday, Secretary Vilsack is set to announce the appointment of Dr. Michael Osterholm [5], a food safety expert, to lead the Food Safety agency at the USDA. According to Food & Water Watch [6], Osterholm has been “a zealot in promoting th[e] controversial technology (of irradiation) [7] as the panacea to contaminated food.

Food irradiation is a proven technology that can prevent food-borne illness or prevent the spread of insect pests. The process is supported by the U.S. Department of Agriculture, the U.S. Food and Drug Administration, the World Health Organization, the American Medical Association, the American Dietetic Association and other governmental and scientific organizations. Food irradiation is a developing segment of the irradiation industry and the Company is well-positioned to take advantage of future growth in this area. Food irradiation was responsible for approximately 18% of revenues in 2008.

Debate over U.S. food safety system heats up

As the federal government scrambles to contain this widening salmonella outbreak, health experts believe this could be a turning point in renewing the debate over irradiating foods to eliminate deadly pathogens.

Maki and others advocate wider use of irradiation to protect fresh food against disease-causing microbes.

3) IBD / Valuation - The Company is Rated 97 EPS and 99 Composite (Same as PDO and LZR before their big runs) by IBD. It is currently #3 on IBD Stocks Under $10. It is ranked #1 ahead of MON in its IBD Category group. If the current top line growth rate continues and we see some additional growth due to greater acceptance of food irradiation, combined with the low float, VIFL is a stock to watch for an ever bigger momentum run in 2009. I will add if it pulls back and keep it in my portfolio, looking for a major momentum run in 2009 on food safety issues.

Disclosure: I am long VIFL.