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Strategies & Market Trends : Value Investing -- Ignore unavailable to you. Want to Upgrade?

To: Paul Senior who wrote (61336)

9/22/2018 11:22:06 AM

From: E_K_S

Respond to of 78740

I have UNFI on my watchlist for over a year now but find that general grocery margins are very thin and the only way to increase EPS is through high value specialty items (think spices, high margin drinks). I have not drilled down into UNFI's products but they may/could have many of these specialty brands where overall margins could be improved.

My plays in this theme (improving old legacy product margins w/ updated product portfolio) are two: (1) BGS and (2) NWL. BGS's product portfolio is food (includes high margin item such as spices) and (2) NWL specialty goods/gadgets that is transitioning to efficient JIT manufacturing/ordering logistic delivery systems in an attempt to improve margins.

You can not really fall back on the GN valuation model here as last 10 years would not necessarily represent what their new product portfolio is/or will be. It may/could point to upside potential if GN model shows that it is significantly undervalued based on the current price. I look to management for significant 'disruptive' change initiatives w/ a realistic time frame (usually 18-24 months minimum). Both BGS & NWL have that and perhaps UNFI does too.

United Natural Foods announces management changes

I need to drill down into the company and see if there are significant 'disruptive' changes being made. I have owned SVU for years and before that ABS so it seems like I tend to migrate to those legacy assets based on the value proposition at the time.

The other theme I like to see in my new Buys is anything related to companies bringing back manufacturing to the U.S.. This would be new capital investments in manufacturing facilities, installing next generation equipment and/or building in new super efficient inventory management/logistic delivery systems.

The value proposition then is to acquire companies w/ undervalued 'legacy' assets, look for significant management initiatives/projects that increase margins and improves manufacturing/delivery and inventory turns. UNFI is a candidate for that.

Good luck. I also will be watching as UNFI could be a good add to my AG basket of companies.

EKS

To: Paul Senior who wrote (61336)	11/30/2018 3:19:15 PM
From: Paul Senior	Read Replies (1) \| Respond to of 78740

UNFI. Man, the market really does not like United Natural's upcoming acquisition of grocery chain Supervalu. Maybe it's because the business model shifts from primarily a distributor, to being more in the fray with having to fight in the fierce grocery store business. UNFI's last quarter disappointed, but overall (past ten years) the company imo shows impressive results: tripling of revenue and stated bv. With acquisition of Supervalu, the company takes on a lot more debt, which is apparently scaring off UNFI investors. Here's a summary article: realmoney.thestreet.com Some metrics though look pretty good: low p/e, low forward p/e, stock selling at 10-year low and below tangible book value (before consideration of the acquisition). I add to my position as stock falls. finance.yahoo.com