Hawkins, Inc. (HWKN)

good company but overvalued so far

Their procurement strategy enabled hawkins to sell their products at high levels of profitability. Using LIFO inventory adjustements, they posted record profits from a decrease in inventory costs. I've noticed that this tends to be a normal part of doing business for Hawkins since, essentially, they are selling commodity based products. The fun's over for now. The CEO did mention raw material prices are softening in the near term, which will drive down profit margins. Their water treatment chemicals may also have softer demand because were comming off peak usage. They are invovled in other industries which are not cyclical by nature, which will offset decreases in other areas. Long term, I'm very bullish on this company. The intrinsic value of the company has steadily increased. They have a history of generating a decent return on shareholder's equity. They've made smart aquisitions, and are expanding their facilities. They're also focusing on higher margin specialty chemicals. In my view, the company's intrinsic value may have grown in line, or just shy of its market value. Long term, the company has favorable economics and will continue to grow its intrinsic value above its peers.