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Smart Balance (SMBL): While the food-products industry is notoriously slow-growth -- think Kraft, General Mills, Kellogg -- it's possible to find a growth company in this sector every once in a while. On the back of strong growth of its buttery spreads products, this $340 million (market cap) company has seen sales grow from $99 million in 2005 to $240 million this year. CEO Steve Hughes has built food-products growth companies before -- he led the team that launched the Healthy Choice brand, growing revenue to $1 billion in just four years. And he led the turnaround at Tropicana, doubling revenue from $1 billion to $2 billion, also in just four years.
A number of innovative new products will be introduced by Smart Balance over the next couple of years. Next up is the nationwide launch of Smart Balance milk, a new "heart healthy" product that has been thoroughly vetted in major test markets, with impressive success. What's particularly interesting about Smart Balance is its operating model. It produces a robust stream of free cash flow because it outsources all of its production. That allows the management team to focus on marketing and innovation, while minimizing capital-expenditure requirements.