This Day On The Street
Continue to site right-arrow
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here
Stocks Under $10 with 50-100% upside potential - 14 days FREE!

Go With the FLO and its Wonder-Full News

Stocks in this article: FLO

Yes, it has been paying a sweet dividend with a yield-to-price currently of nearly 2.39%. But that dividend equals a payout ratio of 70%, which in the food and bakery business is dauntingly high and perhaps unsustainable. Now with the news on the Hostess deal shares spiked 8% on Monday the 14th.

Jim Cramer and Stephanie Link actively manage a real money portfolio for his charitable trust- enjoy advance notice of every trade, full access to the portfolio, and deep coverage of the latest economic events and market movements.

No wonder insiders and beneficial owners (5% owners) who collectively hold 12% of FLO's outstanding shares have been slowly selling as the stock's price has been ascending. Director Amos R. McMullian's reported holdings alone, as of Dec. 5, were close to an impressive 2.435 million shares.

CEO George Deese, whose annual compensation is a comfortable $1.54 million, owns nearly 1,337,000 shares. At the current share price approaching $27, that's over $36,000,000 worth of commitment. It should be pointed out that insiders aren't selling large amounts, just a little at a time.

Perhaps that's because with the good news about the Hostess acquisitions (which generated just under $1 billion in sales last year), Flower Foods is on the verge of a big year ahead in revenue, operating income and EPS. Added to the $3 billion in FLO's current annual sales and the aroma of fresh-baked loaves of bread also includes the scent of much-needed cash flow.

So my take on FLO is if you'd like to join McMullian and Deese as shareholders, it might be prudent to cool your heels for awhile. The stock price appears to have gotten ahead of itself from a technical as well as a fundamental perspective.

With a forward (one-year) price-to-earnings ratio of 21 and a price-to-earnings-to-growth ratio of a lofty 2.87, I'd wait till the stock settles back to $23 or below before I'd be a buyer. Since FLO is planning to finance the deal with Hostess, investors are wise to remember how that adds to the company's total debt load.

At the very least, study the company, watch the news and press releases from Flower Foods, and resolve to buy the dips and to not overpay. If you own the stock consider a tighter trailing stop alert to preserve your gains.

At the time of publication, the author held no positions in any of the companies mentioned.

Jim Cramer's protege, Dave Peltier, finds you Stocks Under $10 picks with explosive upside potential. See what he's trading today with a 14-day FREE pass.

This article is commentary by an independent contributor, separate from TheStreet's regular news coverage.

2 of 2

Select the service that is right for you!

Action Alerts PLUS
Try it NOW

Jim Cramer and Stephanie Link actively manage a real portfolio and reveal their money management tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
  • Weekly roundups
TheStreet Quant Ratings
Try it NOW
Only $49.95/yr

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
  • Upgrade/downgrade alerts
Stocks Under $10
Try it NOW

David Peltier, uncovers low dollar stocks with extraordinary upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
  • Weekly roundups
Dividend Stock Advisor
Try it NOW

Jim Cramer's protege, David Peltier, identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Alerts when market news affect the portfolio
  • Bi-weekly updates with exact steps to take - BUY, HOLD, SELL
Real Money Pro
Try it NOW

All of Real Money, plus 15 more of Wall Street's sharpest minds delivering actionable trading ideas, a comprehensive look at the market, and fundamental and technical analysis.

Product Features:
  • Real Money + Doug Kass Plus 15 more Wall Street Pros
  • Intraday commentary & news
  • Ultra-actionable trading ideas
Options Profits
Try it NOW

Our options trading pros provide daily market commentary and over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.

Product Features:
  • 100+ monthly options trading ideas
  • Actionable options commentary & news
  • Real-time trading community
  • Options TV
To begin commenting right away, you can log in below using your Disqus, Facebook, Twitter, OpenID or Yahoo login credentials. Alternatively, you can post a comment as a "guest" just by entering an email address. Your use of the commenting tool is subject to multiple terms of service/use and privacy policies - see here for more details.
Submit an article to us!


DOW 18,053.71 +23.50 0.13%
S&P 500 2,088.77 +6.89 0.33%
NASDAQ 4,806.8590 +33.3870 0.70%

Brokerage Partners

Rates from

  • Mortgage
  • Credit Cards
  • Auto

Free Newsletters from TheStreet

My Subscriptions:

After the Bell

Before the Bell

Booyah! Newsletter

Midday Bell

TheStreet Top 10 Stories

Winners & Losers

Register for Newsletters
Top Rated Stocks Top Rated Funds Top Rated ETFs