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Strategies & Market Trends : Value Investing
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To: Lazarus who wrote (39484)9/29/2010 6:17:51 PM
From: E_K_S  Read Replies (1) of 78704
 
Hi Lazarus -

Re: Armanino Foods of Distinction Inc. (AMNF.PK)

This is an interesting and profitable micro cap company (EV $18 million). They are probably too small for Kroger to be interested in unless their manufacturing & distribution systems could be scaled up to cover a much larger geographical foot print.

The company leases most if not all of their hard assets including buildings and some of their large processing machinery. One customer accounts for 62% of their business (could this be Kroger?). I see the value of their company is in their people, operation(s) and high quality product(s). The company produces high margin, healthy food products that continue to show good Q-to-Q growth.

Their product(s) carry a high margin so it would be something that a Kroger could make good money on if integrated into their operations as a private label line.

That said, they are just way too small to make any significant contribution to Kroger's bottom line.

This company could be folded into a larger private label "value added" food business (one of several product lines). The key for Armanino Foods is to maintain their quality controls as they grow.

I suspect that Kroger has many vendors where they represent the largest customer. Kroger could simply look at their vendor list, cherry pick the best (high margin) product lines and build their own private label business. Maybe this is the approach they will eventually take.

This indeed is an unusual Penny stock selling at a 10 PE and paying a 7% dividend (including their "annual" special dividends).

The company carries no debt and in fact has CD's worth $500K ($0.02/share) sitting in the bank (as reported in their Q2 2010 report). Stock issued in 2009 at $0.27/share has already more than doubled based on today's market price.

This is one worth watching. I may even start a preliminary buy once I have had a chance to try some of their products.

For a penny stock, this one seems to have a lot of value in it. It's like a Warren Buffet company. Just leave it alone and let the current owners grow the business.

Thanks for the lead.

EKS
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