BusinessWeek Highlights Diamond Foods (DMND)


From Gene Marcial's column "Inside Wall Street" (sub req):

As one of the few nontech companies to go public last year, Diamond Foods (ticker: DMND) -- a distant No. 2 in snack nuts to Kraft Foods' (ticker: KFT) Planter's line -- is off to a strong start, rising from 15 in November to 20 by Jan. 25. "Diamond's Emerald nuts, sold mainly in California, are well on their way to becoming a national brand," says Stephen Cootey of Prides Capital, the largest investor in Diamond, with 5.5%. Cootey says Diamond's potential is enormous. Because it's tiny, with only 5% of the $2.6 billion snack-nut market vs. Planter's 50%, Diamond's products are sold only in supermarkets, rather than the big outlets. But that's changing: Emerald is being tested at 500 Wal-Mart Stores (ticker: WMT), and Cootey expects Diamond sales will jump when big chains (like Sam's Club and Costco (ticker: COST) start selling Emerald. That's the reason he isn't fazed by Diamond's high price-earnings ratio: 25 times the 2006 (ending June 30) forecast of 78 cents a share. Estimates for 2007 run from $1.29 to $1.38. Meanwhile, Diamond's CEO Michael Mendes expects this year's 30-second Super Bowl ad to jack up sales the way last year's spot did.

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