FLO will go UP
$35.00 on 12/11/08
$23.04 (-15.01% from time of market call)
Flowers Foods Inc (FLO) No matter how the economy is faring, people need to eat. This Georgia-based firm makes bread, rolls, snack cakes and other baked goods in the southeast, Southwest and mid-Atlantic.
It sells the fresh and frozen bakery products under brand names including Flowers, Mi Casa, Mrs. Freshley, Nature's Own and Sunbeam. Customers include independent distributors, retail outlets and schools.
Flowers has increased its annual profit since 2002 for a five-year earnings per share growth rate of 19%.
Wall Street analysts expect earnings growth to continue at 19% this year and 12% the next.
Pretax margin, though thin, edged higher the past three years. Return on equity rose the past five years, from 7% in 2002 to 16% last year.
But it hasn't been all smooth sailing for Flowers. It lost money in the late 1990s and early 2000s due primarily to equipment and production problems.
Another caveat: One customer, Wal-Mart (WMT) and Sam's Club, which Wal-Mart owns, accounted for 20% of 2007 sales.
The stock marked an all-time high May 27 after clearing a series of base-on-base patterns. It has eased in mostly lower volume the past two weeks, and is 9% off its high. Buy. Good Trading!
