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TMFLegendPhoenix (< 20)

Patience! For the jedi, it is time to eat as well.

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August 18, 2011 – Comments (0) | RELATED TICKERS: FLO

Have you ever wondered what teddy bears eat?  No?  Me neither.  Try to imagine, if you will, a group of teddy bears living in the forest.  They happen upon a great bounty of food and their entire village is about to enjoy a massive feast.  But just before it's time to eat, something happens and dinner is called off.  No food for anyone.  The little teddies would be understandably upset.  Maybe they were about to fatten up before hibernation and the missed meal made them a bit irritated.  What if the thought of their baby teddy bear cubs starving drove the village into an enraged frenzy?  Now imagine this throng of seething, ravenous stuffed animals becoming violent and doing something completely irrational; like attacking a military outpost or worse: selling off tons of shares of a perfectly good company.
I'm not exactly sure how it came about (it's possible that it wasn't teddy bears), but shares of Flower Foods dropped 10% in one day.  Their earnings report came out yesterday and although it could have been better, it wasn't rabid-teddy-bear-bad.  In this quarter they announced a 3-for-2 stock split and increased their annual dividend rate by 12% per share.  Flowers Foods acquired Tasty Baking Company (along with Tastykake's debt) and they've had to layoff some employees due to redundant positions after the merger.  Earnings per share were less than what analysts predicted due to "higher input costs across all segments," (ingredients, packaging, natural gas). 
Many shareholders couldn't stand the heat so they fled the kitchen.  In my opinion, the sell off was a bit overboard.  Flowers' management is excellent and have shown that they can manage risks, reduce costs and make intelligent acquisitions.  The company is a slow and steady grower that pays a dependable dividend.  My stock pick for this week is Flower Foods at roughly $19.35 / share.

I'll leave you with my regards for Flower Foods:
"it appears you are to be the main course at a banquet in my honor."

 

I should disclose that bread is one of my favorite foods, I currently own shares of Flowers Foods and I plan to buy more very soon.

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