Please ensure Javascript is enabled for purposes of website accessibility
Free Article Join Over 1 Million Premium Members And Get More In-Depth Stock Guidance and Research

Why The Simply Good Foods Company Shot 11% Higher Today

By Eric Volkman - Dec 22, 2020 at 6:42PM

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

The niche foods specialist will soon join an exclusive lineup of stocks.

What happened

Shareholders of the happily named The Simply Good Foods Company ( SMPL -1.54% ) had every reason to be jolly on Tuesday. Their company was tipped to be a component of a well-known stock index, and was rewarded with a nearly 11% pop in share price in the wake of the announcement. 

So what

S&P Dow Jones Indices, the company most famous for being the operator of the S&P 500 index, announced that Simply Good will join its S&P Small Cap 600 index, effective next Tuesday, Dec. 29. The stock replaces financial services company Kinsale Capital Group.

Shopping cart being pushed by gloved hands.

Image source: Getty Images.

Simply Good owns the Atkins line of meals, snacks, and beverages named after the famous low-carb diet popular in the 1990s. Atkins is a durable brand for Simply Good, as its sales have continued to grow.

Augmenting that, in 2019 the company spent $1 billion to buy a peer healthy snack maker, Quest Nutrition, to bolster its product lineup. Although it's still in the somewhat early days, the bulked-up Simply Good is doing well, as it has beat analyst profitability estimates for several quarters running.

Now what

Generally speaking, the stocks that comprise major indexes are generally solid, profitable companies that perform well. Being on the S&P Small Cap 600 will put Simply Good on the radar of the many index funds that trawl indexes for investible stocks. While this alone isn't reason enough to invest in this consumer goods company, it's a positive sign that is worthy of consideration for a buy.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium advisory service. We’re motley! Questioning an investing thesis – even one of our own – helps us all think critically about investing and make decisions that help us become smarter, happier, and richer.

Invest Smarter with The Motley Fool

Join Over 1 Million Premium Members Receiving…

  • New Stock Picks Each Month
  • Detailed Analysis of Companies
  • Model Portfolios
  • Live Streaming During Market Hours
  • And Much More
Get Started Now

Stocks Mentioned

The Simply Good Foods Company Stock Quote
The Simply Good Foods Company
SMPL
$37.19 (-1.54%) $0.58
Kinsale Capital Group Stock Quote
Kinsale Capital Group
KNSL
$208.44 (0.55%) $1.14

*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.

Related Articles

Motley Fool Returns

Motley Fool Stock Advisor

Market-beating stocks from our award-winning service.

Stock Advisor Returns
673%
 
S&P 500 Returns
142%

Calculated by average return of all stock recommendations since inception of the Stock Advisor service in February of 2002. Returns as of 11/30/2021.

Discounted offers are only available to new members. Stock Advisor list price is $199 per year.

Our Most Popular Articles

Premium Investing Services

Invest better with the Motley Fool. Get stock recommendations, portfolio guidance, and more from the Motley Fool's premium services.