Opinions
Michael Underhill
The WhiteWave Foods Co.
WWAV-N
PAST TOP PICK
Oct 24, 2016
Stock price when the opinion was issued
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Secularly this is in the right space. Everybody is looking for healthier, more organic, more natural foods that are better for you. He’s a huge proponent of that, but this is trading at a massive multiple. In the next leg of a rally, you are going to have to see some M&A happen with some traditional players such as Kraft (KRFT-Q) and Kellogg (K-N) looking to expand, making acquisitions.
Not a very well known company, but that is where opportunities really lie sometimes. Organic foods are a very, very popular theme. Valuation is very, very high, but that is because of the growth rate being extremely high as well. From an operational standpoint, they are exceptionally strong at being able to execute, and because of that, they could potentially be a takeover target.
Plant-based alternative foods, non-dairy creamers, including Silk Almond Milk. Incredibly fast growing. The bottom line is growing at 15% per annum. It ticks all the boxes, healthy eating. What you are seeing is food companies catering to healthy living are on fire. He thinks this gets acquired ultimately because it gives much-needed growth to some of the larger food companies.
A food distributor and producer in the US, with a large focus on non-GMO (genetically modified) foods. This has been a growth story as well as a growth by acquisition story, because they have been filling in categories of non-GMO foods. Not cheap anymore. He had got in at around a 20X multiple and it is now closer to 30X. Has been trimming his position.
(A Top Pick July 10/15. Down 11.87%.) A great company. Margins have been very high relative to the food industry. They do specialty foods such as almond milk. Put up some pretty good numbers in the last quarter, but thinks the margins will be under a little bit of pressure going forward. Expects it to get taken out at some point. Sold his holdings.
(Top Pick Jul 2/14, Up 70.22%) The healthy eating trends yields $200 billion of capital flowing into organic and healthy eating foods. There is 60-70% margins on organic milk. It is really a growth story.