Headquartered in Thomasville, Ga., Flowers Foods (NYSE: FLO -
News) is one of the nation's leading producers and marketers of
packaged bakery foods for retail and foodservice customers.
Flowers operates 33 bakeries that produce a wide range of bakery
products marketed through the Sun Belt states via an extensive
direct-store-delivery network and nationwide through other
delivery systems. Among the company's top brands are Nature's
Own, Cobblestone Mill, BlueBird, Mrs. Freshley's, and European
Bakers. For more information on the company, visit
[Source: Company Press Release]
Reasons to Invest:
It seems that a tight range consolidation period has taken over
the market. Let's face it, we have seen more downside than
upside in the past two weeks, and this makes for a difficult DRIP
recommendation. Rather than just picking a ticker and running
with it, I decided to forgo last week's DRIP of the week to see
if we could reach a bottom on the INDU, SPX and NDX. Low and
behold, it seems that today's uptick (as small as it may be)
could be the sign of new buyers taking a stab at the dip. This
makes for a better scenario. I think we all would agree that it
is easier feeling conviction for a long term pick when the market
is going long, as opposed to when the market is selling off.
This week's Drip of the week is Flowers Foods (NYSE:FLO). The
stock has been trending in an upward regression channel since
January of 2003 and is currently idling in the middle bar of this
channel. News supporting the stock has been upbeat and their
financials continue to improve.
For their 2003 fiscal year revenues increased by a margin of 9
percent to $1.45 billion. Their net income from continued
operations before an accounting change rose 21% to $52.8 million.
FLO's market cap is 1.20 Billion. They have a trailing P/E of
23.30 and a profit margin of 3.63 percent. They reported a
revenue growth of 1.40 percent for the fiscal year of 2003.
As far as dividends go, they currently yield a 1.49 percent
dividend, which tallies out to $0.40 per share per year. On
February 13th, 2004 they hit their 52-week high of 27.70, which
comes out to a 54-week change of 60.29 percent. The good thing
about their current level is that there is no overhead resistance
to slow down their "FLO."
On February 5th, 2004 Flowers Foods reported a fourth-quarter net
income of $17.2 million or 37 cents a share. This is rather
impressive when you consider their previous year's loss of $9.9
million, or 22 cents a share.
Analyst Timothy Ramey of D.A. Davidson & Co noted on February
5th, "Ever since they sold Mrs. Smith's, they've been able to
focus on their fresh bakery component. It was a money losing
distraction. Now they are definitely the best performer in their
segment." In the same Reuter's article, Flowers Foods said that
sales are expected to be $1.4-$1.5 billion.
Reuter's has a low risk rating on new entries into FLO. They
have a year to date price performance ranking of 87 on a scale of
0 to 99 (99 being the best).
While their market cap, revenue growth, and revenues do not come
close in comparison with their major competitors, CPB and GIS,
they have the highest gross margin of their group, registering in
at 50.44 percent.
As far as technical analysis goes, the company is in a pretty
solid trend. Support and Resistance have consistently been at
the top and bottom of their regression channel and the stock has
continued to retest both the upper and lower bars of this
channel. The simple 10-DMA is resting over the 20-DMA, which is
usually an indication of further upside potential. The January
profit taking session for FLO has attracted new buyers at the
lower premium, as well as carried the stock from overbought to
neutral territory on the stochastics indicator. The MACD is
currently on a buy signal, and volume has remained in a range of
101K - 250K. FLO has a traditional 3-box reversal chart on the
PnF as well as a PnF price objective of 38.50. At its current
level, I would look for a dip back to 26.00 before adding the
DRIP to my portfolio. Remember, it's always better to buy
low and sell high.
This ends another exciting episode of the DripAdvisor.com Drip of
the Week. Stay tuned next week, as we will spotlight another
stock worthy of the DripAdvisor.com limelight.
Until Next Week,
Strong Buy 2
Strong Sell 0
Brokers Covering 5
Shares to Qualify = 1
Auto-reinvestment = No
Accept Foreign Accounts: No
Temper Enrollment: Yes
Min/Max Investment = $3,000/Month
Reinvestment Fees -
Dividend investment fees: 0
Cash investment fees: 0
Auto reinvestment fees: N/A
First Union Nat'l Bank
1919 Flowers Circle
Thomasville, GA 31757
Phone: (229) 226-9110
Fax: (229) 225-3816