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Wednesday, 02/25/2004

Go With the FLO
By Nich Sheldon
FLO - Flowers Foods

Company Description

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 www.flowersfoods.com.

[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,
Nich Sheldon
Editor

Broker Recommendations

Strong Buy         2
Buy                1
Hold               2
Sell               0
Strong Sell        0

Brokers Covering   5


DRIP Information:
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


Transfer Agent:
First Union Nat'l Bank 
800-829-8432


Corporate Headquarters:
1919 Flowers Circle
Thomasville, GA 31757
Phone: (229) 226-9110
Fax: (229) 225-3816



 
 

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