Why Flowers Foods' Shares Jumped

Although we don't believe in timing the market or panicking over market movements, we do like to keep an eye on big changes -- just in case they're material to our investing thesis.

What: Shares of baked goods maker Flowers Foods (NYSE: FLO  ) jumped 11% today, on speculation that it may buy some attractive assets.

So what: This morning's announcement that Hostess, maker of Twinkies and an assortment of other snacks, would liquidate its business has buyers circling the company. Someone is sure to buy assets like Hostess's brands, and Flowers Foods is a prime candidate.

Now what: The elimination of Hostess does reduce competition in the baked goods business, which may be a slight positive for Flowers. But speculation that the company will buy Hostess's assets is just speculation at this point. I don't see this being a long lasting pop and, with shares trading at 20 times next year's earnings estimates, I'm not a buyer on speculation today.

Interested in more info on Flowers Foods? Add it to your watchlist by clicking here.

 

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