This Small Cap Speciality Food Company Could Be A Great Fit For Your RRSP.
This Small Cap Speciality Food Company Could Be A Great Fit For Your RRSP.
Armanino Foods(AMNF) – Never heard of it? That’s okay, most people haven’t. This is a company that popped up on a stock screen of US stocks I did a while back, while looking for some companies to add to my RRSP.
They are a small speciality food company that provides freeze-dryed foods and sauces to stores & customers across the world. Their products consist of Pesto, Pasta & Meatballs. Their Pesto recipe is a family recipe that dates back over 100 years!
Stock Price & Key Metrics:
The stock is currently trading at a price of $2.95. This represents a P/E of about 15. While not an extremely low valuation, considering the stocks past performance, future potential and dividend history, combined with the projected future growth I think it is currently trading at a nice discount. (More on this later).
AMNF currently pays a quarterly dividend of .0225 which represents a yield of 3.03%. The dividend has grown consistently over the last 5 years from $.016 to $.0225. The dividend also looks to be safe, with a fairly conservative payout ratio of about 60%.
A few other things to like about AMNF
Aside from a safe and growing dividend, the company also has a strong balance sheet, and has been consistently growing their revenue.
Here are some stats from 2015 to 2017:
- Net Sales increased from 34.6 million to 38.9 million
- Gross profit increased from 12.1 million to 13.4 million
- Increased Net income from 4.03 million to 5.1 million
- Earnings per share have increased from .126 to .159
- The company has declared 74 consecutive dividends
Each of the Directors have been with the company for over a decade, and more importantly they own over 5% of the company’s shares, which usually means their interests are in line with the common shareholder. I am a big fan of companies that have a solid group of insiders that own shares as well (like one of my other holdings – Plaza Reit).
Aside from the dividend increases, the stock has performed very well over the last 10 years, and with a 7% projected growth in sales, I expect this trend to continue:
More results from most recent financial statement (3rd quarter 2018)
- Net sales increased by 7% to 10.692 million
- Invested 750,000 in new manufacturing equipment, which should improve efficiency and allow further growth
- Pursuing growth in new products and markets
- Sales & Net income grew, while cost of goods sold decreased
There is lot’s to like- what about the downside?
The main downside I see to owning this stock, is how thinly it trades. Average volume traded is under 25,000 per day, which means any good or bad news, and there can be HUGE fluctuations in price. This could also make it hard to scoop up shares at the price you want – or worse – getting rid of your shares if need be.
Further Reading:
As always, I recommend doing your own due diligence before making a purchase. That said, while doing some research for this post, I came across two articles which may help make your decision easier.
I noticed that Lanny From Dividend Diplomats had recently purchased this stock as well. Check out his post HERE
THIS recent article on Seeking Alpha makes a lot of the same arguments for buying the stock that I hopefully just made as well.
Final Thoughts:
Although I haven’t purchased this yet – I will continue to watch it. I think it is a good buy at the current price, however I want to research a few more companies before I make a final decision. That said – don’t be surprised if you see an upcoming post from me in the next few weeks that I did in fact purchase this.
3 Comments on “This Small Cap Speciality Food Company Could Be A Great Fit For Your RRSP.”
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Thanks for sharing, Jordan. I think I first heard of this company a few years ago when Jason Fieber from DivMantra was buying it. Didnt dig too much into them back then, but sounds like an interesting play. Will take another look.
cheers
R2R
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I’ve seen this brand on the shelves. If Lanny and Jason are buying it then it’s a good sign 🙂
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