While the entire world was waiting for and anticipating the next-generation “iPhone 6” from Apple Inc. (NASDAQ/AAPL) on Tuesday, General Mills, Inc. (NYSE/GIS) announced it was acquiring organic and natural food company Annies, Inc. (NYSE/BNNY).
Okay, the launch of the iPhone 6 was clearly more exciting, but so what? The launch was more hype than substance, unless you consider a new and bigger iPhone earth-shattering.
But I’m not here to talk about Apple. What I will discuss is the food sector, especially the makers of organic and natural food products, which appear to be in play, based on my stock analysis.
If you owned Annie’s before it was acquired by General Mills, congratulations on your 38% jump in stock price on the news! Go treat yourself to some fine wine and a great meal. If you didn’t get to profit from this deal, there are still some stocks in the same sector as Annie’s that have great potential.
One small-cap natural food products company that I like based on my stock analysis, and this is one that I have been covering for a few years now, is Inventure Foods, Inc. (NASDAQ/SNAK). The small company produces and markets specialty food brands, concentrating on the snack food market. Some of its product lines include nutritional and natural snacks.
Inventure Foods sells products under its own brand and other licensed brands, including the following: “Boulder Canyon Natural Foods,” “Jamba,” “Seattle’s Best Coffee,” “Rader Farms,” “T.G.I. Friday’s,” “Nathan’s Famous,” “Vidalia Brands,” “Poore Brothers,” “Tato Skins,” “Willamette Valley Fruit Company,” “Fresh Frozen,” and “Bob’s Texas Style.” The company’s manufacturing plants are located in Arizona, Indiana, Washington, Oregon, and Georgia.
On the chart, the stock has edged lower since trading at a 52-week high of $14.50 on March 26, 2014. My stock analysis indicates that the technical picture is mixed. Inventure Foods is trading below its 200-day moving average (MA) of $12.56 but above its 50-day MA of $11.57. While the stock is showing some buying at this time, the appearance of a death cross on the chart could mean a potential buying opportunity on weakness, as my stock analysis suggests.
Chart courtesy of www.StockCharts.com
Inventure’s most recent second quarter was excellent. Earnings came in at $2.5 million, or $0.12 per diluted share, nearly doubling from $1.4 million, or $0.07 per diluted share, in the same quarter last year. Revenue growth was strong at 33.9% year-over-year, according to my stock analysis.
The next two years also look bright, as my stock analysis suggests. Annual revenues are estimated to rise 32.5% to $285.70 this year, followed by 10.8% to $316.65 million in 2015, according to Thomson Financial.
Annual earnings are estimated to be $0.54 per diluted share in 2014, up from $0.33 per diluted share in 2013. In 2015, earnings are estimated to come in at $0.67 per diluted share, according to Thomson Financial.
Valuation-wise, the stock is reasonably priced at 18.25 times its 2015 earnings per share with a price-to-earnings growth ratio of 1.05, based on my stock analysis. With a market cap of $238 billion, my stock analysis suggests that a takeover would not be difficult to digest for a big company.