To quote the inimitable Warren Buffett, "Price is what you pay and value is what you get." And to quote my inimitable mother, "patience is a virtue." With those pearls of wisdom firmly entrenched in my subconscious I decided to see if I could find a few small-cap plays that were a nice value for the price and worth a long-term relationship with my portfolio. I think I may have been successful, but only time will tell. They may explode, in which case I will be the wisest investor I know. On the other hand they may simmer slowly like a pot of spaghetti sauce on the back burner, in which case I hope I know when patience is not strategic to the stocks and my success any longer. So with a nod to mom and Warren, here is a contender that looked decent to my small-cap eyes.
Torrance California based Farmer Brothers Co. (NASDAQ: FARM) is a coffee producer and distributor. I don't drink coffee, but after looking at the numbers on this company I just might start. FARM has a market cap of $225. 95 million and is currently trading up at $13.83. The company has doubled in the past six months to an amazing 200 percent APR. It seems that each time FARM begins to sell off, more investors move in, which is great for investors who want to ride the rally as higher highs are created and lower lows are created; a nice trait for those who still want to get in at a decent entry point. Earnings are expected to be released the first week of February and FARM is anticipated to earn $0.24 on sales of $143 million. That's pretty big difference compared to a $0.6 cent loss on sales of $123 million it produced last year. With shares more than doubling in the last six months, Wall Street is beginning to take note. Roth Capital Partners increased its price target from $14 to $17. Zack's has designated it a strong buy. Singular Research has started coverage with a $15 target price. Also worth noting is that the company recently garnered two strategic contracts: servicing McDonald's (NYSE: MCD) as a coffee vendor and Treehouse Foods Inc. (NYSE: THS), also as a purveyor of coffee. These recent contract will certainly help company growth and bottom line numbers.
As always, this may not be a play for you or Warren, or for my mom for that matter. That's why I always encourage research and wise decision making on your part but I have to admit, this is a pretty strong brew.