With the market showing some strength again, it is time to consider dialing up your risk tolerance a bit with some small-cap stocks. One we’re looking at right now is Seneca Foods Corp (SENEA, Rated B-) on our Best Growth Stocks Heat Map at the No. 12 spot.
The company has a market cap of $333 million, but it pays no dividend and has little analyst coverage. It packages fruits and vegetables for itself and other companies, both under private label brands and other household brands such as Green Giant (General Mills).
In its recent results period, it had 5.3% decline in sales, but it compensated with a more than doubling of gross margins to 12.3% from 5.7% and posted further efficiencies to help boost the bottom line as well. It also recorded a $20 million increase in contractual payments from General Mills.
From a technical perspective, the stock has broken out to the upside and, if market conditions hold, it could continue to move in that direction. But watch it closely—if we get a pullback to $30-$31, that could provide an attractive entry for those who want to add it to a well-balanced portfolio.
Mike Burnick, Weiss Stock Ratings Heat Maps, published by Money and Markets, a Division of Weiss Research, Inc.,
www.weissresearchissues.com/weiss-stock-ratings-heat-maps, 1-800-291-8545, March 2, 2016
