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I’ve been looking at Dean Foods (DF) as an attractive value play. Like a lot of value stocks, this company is not without its bruises. The company’s recent earnings history has not been very terribly strong. Still, they are making money and the stock is so beaten down that it could rally 10%-20% from here and still be seen as a bargain.

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Dean is a large and well diversified food company. They own about a zillion brands. Despite their lackluster earnings, they are profitable which says a lot in a rough economy. Dean has bought up a ton of businesses over the past several years and they now find themselves fighting not one, not two, but three anti-trust battles. On top of that, margins are under attack thanks to retailers using milk as a loss-leader to get folks in the door.

Last month, the company said it earned $1.59 for all of 2009. For 2010, Dean said they expect EPS to range between $1.54 and $1.64. The mid-point, of course, is exactly what they made last year. So that means they don’t expect any growth. Still, the stock is going for less than 10 times next year’s earnings. Considering what you can get in the bond market right now, that’s not so bad. For Q1, Dean expects EPS between 25 cents and 30 cents.

The bottom line is that Dean is in rough shape right now, but it things start to turnaround by the middle of 2011, the stock could rally quite handsomely.

Source: Dean Foods: A Bargain in the Making?