Nuts! What more can you say about John B. Sanfilippo & Son
Its annual report, issued in August, warned that after multiple years of double-digit growth, the tree nut and peanut purveyor was facing the prospect of being constrained in capacity. Dash that concern -- the company also announced today that pounds shipped declined 1.4% in the first quarter.
John Sanfilippo's stock had skyrocketed as snacking low-carbohydrate dieters strongly increased the demand (and prices) for nuts. The stock climbed 12-fold from its January 2002 low to its January 2004 high. Not all nuts stocks benefited the way Sanfilippo has. Hawaii's largest grower of macadamia nuts, ML Macadamia Orchards
The company wisely used its newfound stock wealth to raise $38.6 million -- when the stock was selling for twice what it is today. The combination of the stock sale and strong cash flow from double-digit growth allowed it to reduce its total debt from $70.1 million in June 2003 to $19.2 million in June 2004.
So is it time to buy Kraft Foods
Sanfilippo says the almond price squeeze is now out of the way. That's good news, because the company's peak season is October through the holidays. And, if nut consumption continues at higher than historical growth rates, as the CEO expects, then the stock's 6.5 multiple against fiscal 2006 earnings is just nutty (or low).
Some low-carbohydrate-producing companies have gone through the complete boom-to-bust cycle, like egg producer Cal-Maine Foods
For more Foolish analysis to chew on, see:
Fool contributor W.D. Crotty does not own stock in Sanfilippo, but does love nuts. In fact, W.D. might be nuts.