THS
Brought THS at $15.99 today, here is why I like this food play.
THS earned .17 last quarter and .20 so far through 6 months ended. I expect sales growth to possibly turn positive as early as q3 but definitely by q4, with further sales growth expected in the next FY. Based on Analyst estimates they are expected to earn $1.76 this FY and Analyst estimates are for $2.08 in the next FY. That might be a bit optimistic but I do expect EPS to grow decently over the current FY. I expect a 12 multiple conservatively if they do around $2.00 next year I see a scenario where the stock FV is around $24.
THS is an attractive entry point as your getting this beaten up stock at 52 week lows, these guys use to trade at 15x-20x easily, now they are trading at 7-8x next years estimate. hence a cheap historical valuation at 52 week lows seems like a good entry point for me.
THS is a maker of private brands, I believe private brands in the food aisle are gaining market share over branded products which is one of the main reason why I like this one as well. This stock fits my investment thesis of private brands gaining market share over branded products and this is a way to play that at a very attractive valuation and with earnings growth turning positive soon and into next year I think that will be the catalyst for this stock to return to more historical norms on valuation metrics for the company.
Conclusion: I think THS is an attractive investment opportunity here at 52 weeks lows, a way to play private brands which I truly believe could be a thorn in the side of many branded products in the staples space. I also expect earnings to start to show improved numbers in the coming quarter and show decent earnings growth in the next FY. Time will tell. All is just my opinion, and I could always be wrong though.
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