B&G Foods
B&G Foods, Inc. (NYSE:BGS) produces and sells shelf-stable foods in the U.S., Canada, and Puerto Rico. It offers Mexican food (taco shells, salsas, etc.), syrups, salad dressings, pancake mixes, various organic products, hot cereals, fruit spreads, meat spreads, flavor enhancers, various sauces, cooking sprays, whole and crushed tomatoes, canned beans, sugar substitutes, vinegars and cooking wines, molasses, among other products.
It distributes its products to various retail outlets, wholesalers, food service companies, etc.
EPS projections are solid, and its 9.6% profit margin is strong for its industry. The company is known for its acquisition prowess. Its ROE is high, but that’s due to being levered-up with debt. While the debt load is high for my liking, given the other metrics, it’s not high enough to be a deal-breaker.
Flowers Foods
Flowers Foods, Inc. (NYSE:FLO) produces and sells bakery products in the U.S. Its direct-store-delivery segment produces fresh bakery foods, such as breads, rolls, tortillas, and snack cakes. The company’s brands include Flowers Foods, Inc. (NYSE:FLO), Natures Own, Tastykake, and many others. Products are delivered to retailers and food service companies on the East Coast, in the Southwest, and to select markets in California and Nevada. Its warehouse delivery segment produces snack cakes, breads, rolls, and frozen breads for national retail, food service, and vending customers. This segment has various brands.
The company’s 24.3% ROE indicates it’s very efficient at generating profits from investors’ money. Relative to others in the food industry, it’s reasonably valued on a PEG basis — its 1.7 PEG is tied for the lowest among this group.
Takeaway
Many Americans are drawn toward sugary, salty, and/or “convenience” (processed) foods. The AMA’s classification of obesity as a disease will do nothing to stem the trend among (some) people of consuming foods in these categories, in my opinion.
As to the highlighted stocks, a basic analysis indicates they have potential as solid investments. However, investors need to do additional research. Flowers Foods, Inc. (NYSE:FLO) appears the most attractive given its great ROE, relatively reasonable valuation, and lack of any notable negatives.
The article Why A Medical Group’s Decision Could Be Bullish For Snack Foods originally appeared on Fool.com and is written by BA McKenna.
BA McKenna has no position in any stocks mentioned. The Motley Fool recommends Flowers Foods. BA is a member of The Motley Fool Blog Network — entries represent the personal opinion of the blogger and are not formally edited.
Copyright © 1995 – 2013 The Motley Fool, LLC. All rights reserved. The Motley Fool has a disclosure policy.
