Diamond Foods, Inc. (DMND), J&J Snack Foods Corp. (JJSF): 5 Reasons to Stay Away from This Nutty Company

Snack food rival Snyder’s-Lance Inc (NASDAQ:LNCE) also understands pretzel popularity. In October 2012 it purchased Snack Factory, the maker of the Pretzel Crisp line.

Keep in mind that Snyder’s-Lance comes with its own set of problems, like weaknesses in private brand revenue , trademark writedowns of potentially valuable brands , and possible disenfranchisement of previous employees. However, Snyder’s-Lance shows vast fundamental improvement stemming from the Snack Factory acquisition . Company revenue and free cash flow increased 8% and 262%, respectively, year to date. Pretzel popularity, as well as new variations on its cracker sandwiches introduced this year, will serve as catalysts for possible growth in its top and bottom lines.

Looking forward

Keep an eye out for possible future lawsuits against Diamond Foods related to its accounting scandal. The company will need to solve walnut supply issues and boost snack volume in order to increase operating profitability to better meet interest obligations on its debt. The wise investor would stay on the sidelines until things improve for this company. J&J Snack Foods Corp. (NASDAQ:JJSF) and Snyder’s-Lance serve as better bets, as they capitalize on pretzel popularity and new products, with both free to focus on their business instead of their accounting departments.

The article 5 Reasons to Stay Away from This Nutty Company originally appeared on Fool.com and is written by William Bias.

William Bias has no position in any stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. 

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