Stick with your picks if they story hasn't changed. It could result in a tasty payoff.
After watching its share price and my resulting CAPS score on it fall off of a cliff, I was beginning to doubt the outperform call that I made on the snack food manufacturer / distributor Lance (LNCE) back in May. Then POW, the company's fat 28% gain today fixed my score on this pick right up :).
My timing could have been better, but it usually can be when purchasing stocks. All one can do is develop a sound reason for purchasing stock in a company and watch it play out. Picking the exact bottom is more luck than anything. I stuck with my LNCE green thumb because none of my original reasons for buying the stock in CAPS had changed.
Here's the brief note that I wrote on Lance back in May:
Lance's stock was absolutely crushed when it missed earnings and reduced guidance a couple of weeks ago. The stock is now starting to get attractive.
According to an article that I recently read in the trade publication for the National Association of Convenience Stores impulse buys of snacks at convenience stores have been steadily increasing.
Lance has taken steps to improve the efficiency of its Direct Store Delivery operations which should lead to improved margins.
Talk about a flood of good news. Today Lance reported a 27% increase in second-quarter profit, proposed a $3.75-a-share special dividend, and announced that it plans to merge with Snyder's of Hanover.
The merger will add Snyder's delicious pretzels (man I love those things) to Lance's stable of brands, which already includes brands like Cape Cod, Tom's, Archway, Stella D'oro, and of course those unusually orange square crackers that have peanut butter in the middle.
Who didn't eat those things as a kid? I have fond memories of going bass fishing with my father in our aluminum Sears rowboat while munching on those orange crackers and drinking a can of Lipton Iced Tea many moons ago.
This is a serious pop. I don't have enough conviction in Lance to stick around. I'm closing out my pick and pocketing the cool seven CAPS points and positive accuracy.