Today’s recommendation is a small, very specialized (although it serves a huge market) food company from small-cap hunter Tom Bishop. This stock is appropriate for speculative investors.
Amira Nature Foods (ANFI)
from BI Research
Amira has a P/E to growth rate ratio well less than 1 and has beaten guidance in three of the past four quarters by at least 30% (and matched guidance in the other quarter). The most recent beat was by 110% and estimates for this year and next are rising. Amira has a decidedly emerging market bent, but is head-quartered in Dubai, is New York Stock Exchange listed (via an IPO) and has top flight auditors (Grant Thornton). And I know and love the product:Basmati rice. ... That the shares rank 10.9 in our BI Ranking System, rate 1 at Zacks and have a composite IBD rating near the top of the heap at 95 is just more gravy here.
So, backing up to the beginning, Amira was founded in 1915 and has evolved into a leading global provider of packaged Indian specialty rice, with sales in over 40 countries today, of which 25 carry the Amira brand. The Company is targeting 70 countries by 2017. The majority of revenue is generated through the sale of Basmati rice, a premium long-grain rice grown only in certain regions of the Indian subcontinent. ... India, where the rice is grown, accounts for about 50% of revenues. They also sell in both emerging and developed markets to global retailers such as Carrefour, Costco, Jetro Restaurant Depot, Lulu’s and Smart & Final, and through the foodservice channel.
[Amira] has grown at about a 25% per year rate over the past 25 years and at a 27% CAGR since 2010, which doubled sales to $414. The company has issued “conservative” guidance of $480 - $507 million for the year in progress, FY3/14, and “expects to achieve $1 billion in revenue in three to five years,” doubling again, with EPS growing at about 30% per year. ... In addition to a BI Rank of 10.9, three of the four analysts following the stock are at Strong Buy with one at Buy. ANFI is an excellent Buy to $14.
Tom Bishop, BI Research, www.biresearch.com, September 25, 2013