Long (OFI@$4.68)
Whenever I come across a company with a free cash flow yield in double digits I pay attention. Overhill Farms is one such - and the fact that it is in the defensive (and wine related) food industry is a bonus.
"Overhill Farms". The name conjures up a gentle agricultural landscape with hill and dale, perhaps some free-range chickens clucking hither and yon and the sun setting on golden haystacks whilst silhouetting the lovely Rhonda (the farmer's daughter at above left) against the horizon at day's end.
Unfortunately, the bubble bursts when one reads that the business is all about frozen foods. It's bad enough that these don't marry to fine wine particularly well (although I note they do a frozen grilled filet in bordelais sauce). But the company also derive most revenue from just four big clients and - additionally - carry material exposure to the airline catering market. Plus they are tiny which makes for large variations in the results due to relatively small factors.
Still, that is the path all small caps must tread as they grow - and Overhill has been growing and improving financial metrics impressively over the last 5 years. The technical squiggles are good enough but there is enough volatility to keep portfolio management eyes watchful.
Posts
11 hours ago
1 sips:
Overhill Farms, Inc. (NYSE Alternext US: OFI) today reported sharply higher net income on slightly lower net revenues for the first fiscal quarter.
The Company reported net income for the three months ended December 28, 2008 of $2.5 million or $0.16 per basic and diluted share, an increase of 56% from the $1.6 million or $0.10 per basic and diluted share for the year-ago quarter.
Net revenues for the first quarter of fiscal 2009 were $55.3 million, down $1.5 million or 2.6% from the $56.8 million reported for the first quarter of fiscal 2008.
Looks like OFI has gain efficiency in operations. I have checked out some of their products at Safeway - top quality stuff.
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