With all the volatility in the global stock markets and concerns over debt in the United States and Europe, many investors are turning to food stocks for capital preservation. Food stocks are considered a safe harbor to shelter your assets, because no matter what happens to debt ratings, the economy, etc., people will still be eating and these companies will be some of the least affected by market turbulence. While all of these food related stocks have upside potential longer term, there is one in particular that appears most likely to double in the next couple of years based on its small size and earnings growth. Here are the companies to consider and after reviewing all of them. The one I believe is most likely to double is Inventure Foods (SNAK):
Dean Foods Co. (DF) makes, markets and distributes branded and private label dairy products such as half-and-half, sour and whipping cream, coffee creamers, ice cream, yogurt, cottage cheese, fruit juice, ice tea, silk soymilk, milk, etc. This stock has been out of favor for awhile and looks cheap on any dips. This stock could double in the next couple of years if management performs and if investors get renewed confidence.
Here are some key points for DF
Current share price: $11.57
The 52-week range is $7.13 to $13.90
Earnings estimates for 2011: 71 cents per share
Earnings estimates for 2012: 91 cents per share
Kraft Foods, Inc. (KFT) is a leading maker of snacks, candy, juices, and many other food products worldwide. This company owns many well known brands such as Oscar Mayer, Maxwell House, Trident, Dentyne, Hollywood, Halls, Jacobs, Nabisco, Oreo, LU and others. Food companies have strong pricing power in times of inflation and food products are always in demand. This stock has been rising recently, so I would wait for pullbacks before investing. This company has upside potential but due to size, it's not likely to show significant growth or double anytime soon.
Here are some key points for KFT
Current share price: $35.37
The 52-week range is $28.56 to $36.02
Earnings estimates for 2011: $2.23 per share
Earnings estimates for 2012: $2.50 per share
Annual dividend: $1.16 per share which yields 3.3%
Smart Balance, Inc. (SMBL) is a maker and distributor of specialized food products in the United States and other countries. Its products appeal to health conscious consumers. The products offered under the Smart Balance and Earth Balance brands include butter, peanut butter, cooking oil and cooking sprays, mayonnaise, popcorn, milk, and sour cream. This stock is trading very close to the book value at $5.32 per share and has been trending up for the past couple of months. Any dips from this level look like a good buying opportunity. For this stock to double, it needs to see much stronger earnings power and that does not appear likely in the short term.
Here are some key points for SMBL
Current share price: $5.32
The 52-week range is $3.35 to $5.74
Earnings estimates for 2011: 21 cents per shareEarnings estimates for 2012: 27 cents per share
Inventure Foods, Inc. (SNAK) is a maker of various food products with brands including Poore Brothers, Bob's Texas Style, and Boulder Canyon Natural Foods potato chips, Tato Skins potato snacks, and others. This company also manufactures private label snacks for grocery and other retail chains. Inventure also grows, processes, and markets raspberries, blueberries, rhubarb, marionberries, cherries, cranberries, strawberries, and other fruits to wholesale customers in the United States. This stock is overbought now and recently hit a new 52-week high, presumably on news that it will ring the opening bell at the NASDAQ stock exchange on Monday, July 18, 2011. Read about that here. Stocks often get a boost from the exposure this brings and then sell off a day or two later. I think it makes sense to sell into the rally. However, after the excitement settles down, I would be watching this stock as one that could double in the next couple of years. If management continues to execute plans, earnings could be around 50 cents per share in a couple of years. With a price earnings multiple of about 20 that would put this stock around $10, which is double the current levels.
Here are some key points for SNAK
Current share price: $4.76
The 52-week range is $2.96 to $4.84
Earnings estimates for 2011: 24 cents per share
Earnings estimates for 2012: 38 cents per share
Diamond Foods, Inc. (DMND) is a leading maker of snack products including roasted and mixed nuts, breakfast trail mix products, popcorn products, and potato and tortilla chips. The company owns well known brands such as Emerald, Pop Secret, Kettle, and Diamond of California. This stock has had a big run lately and is trading near 52-week highs. The price-to-earnings ratio looks expensive at about 30. I would be taking profits in this stock and think this stock has more downside than upside from these levels.
Here are some key points for DMND
Current share price: $75.35
The 52-week range is $37.91 to $79.37
Earnings estimates for 2011: $2.53 per share
Earnings estimates for 2012: $3.10 per share
Annual dividend: 18 cents per share which yields .2%