NEW YORK (TheStreet) – Flowers Foods (FLO) will announce financial results for its third quarter on Wednesday. And despite its shares rebounding nearly 10% in less than a month from its 52-week low, picking Flowers as a potential turnaround candidate is too risky.
The Georgia-based company, which owns such popular packaged baked goods as Nature's Own, Wonder Bread and Tastykake, continues to struggle with rising costs -- most of which came from its geographic expansion and initiatives to improve its products.
The problem, however, is that these plans have yielded very little to zero return.
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The chart below, courtesy of Google Finance, shows how Wall Street has responded to Flowers' struggles. Two months ago, investment research firm Zacks issued a "Strong Sell" recommendation. This pushed Flowers to a new 52-week low of $17.46 on Oct. 16.
And although the stock has since rebounded, the optimal buying opportunity has come and gone with its 52-week low. The easy money has already been made.
While the shares still have a 12-month median target of $23 and a high target of $25, which calls for gains of 17% and 27%, respectively, what's more important to consider is the catalyst to get Flowers back to its resistance level of around $21. Absent better sales and cost reduction measures to boost the bottom line, Flowers will be -- at best -- dead money for the next twelve months.