Should You Invest In Food Marketing?
Long/Short Equity, Portfolio Strategy
Seeking Alpha Analyst Since 2012
Small-caps are an interesting method of investing that gives you a different perspective. With investing in traditional large-caps, there usually is not going to be any major new development that could double the stock. While small and micro-cap investing can be risky, with strong fundamental and technical analysis your odds of success increase. Another interesting thing about investing in smaller companies is that these companies could be the leaders of tomorrow and provide huge returns. Additionally, there are a variety of niche industries in the small-cap space. Today I will be reviewing a company that imports, exports, and markets different kinds of food products such as vegetables and fruits. I am talking about G. Willi Food-International Ltd. (NASDAQ: WILC).
Turning to the fundamentals, G. Willi Food has a market cap of $104.44 million and is currently rated a "strong buy" from analysts. Price to earnings is at 11.67 and forward price to earnings is at 9.25; both at a nice discount relative to the S&P 500. Price earnings growth comes in at .78, price to sales is at 1.14, price to book is at 1.05, and price to cash is at 1.76. The company has no debt and cash per share of $4.57 giving the consumer goods name a current ratio of 10.90, iron-clad. Earnings are expected to rise 73.3 percent this year, 14.5 percent next year, and 15 percent over the next five years. Management efficiency ratios could use some work as return on assets are 8.3 percent, return on equity is 9.2 percent, and return on investment of 4.6 percent. Margins are also a little low, but not bad for such a small company. Gross margin is at 24.9 percent, operating margin is 9.6 percent, and profit margin is 9.6 percent.
Another very important fundamental metric is that insiders own 62 percent of all G. Willi Food shares. This is important because it shows the people who run the company are confident in the success of the company and the rise of its shares. Shares are currently up almost 70 percent year-to-date.
As you can see, this little known food company based in Israel has some pretty impressive fundamentals and certainly has the characteristics of a long-term hold for profits over the long haul. Earnings quarter-over-quarter are up an astounding 89 percent, while sales quarter-over-quarter are up 27 percent. That is extremely impressive and tying that to no debt and ample cash, often spells long-term success.
As with any investment, there is always risk. The risks in this case involve major stock market corrections and economic downturns. Lucky for G. Willi, people need food no matter what the economic climate, so that could help soften any macroeconomic setback.
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