Shares of Illinois-based food manufacturer TreeHouse Foods, Inc. (THS - Analyst Report) reached a new 52-week high of $68.82 on Jul 3 following its acquisition of Cains Foods – a maker of mayonnaise, dressings and sauces. The share price of the stock has been on the rise since the acquisition on Jun 24, gaining 4.3% in just 11 days.
Shares of this Zacks Rank # 2 (Buy) stock closed at $68.66 on Jul 3, recording a healthy return of 28% on a year-to-date basis. The company’s long-term estimated EPS growth rate is 10.13%. Average volume of shares traded over the last three months came in at approximately 116K.
Acquisition of Cains Foods
TreeHouse completed the acquisition of privately-owned Cains Foods for $35 million. The deal was announced on Jun 24, 2013 and is expected to boost TreeHouse’s earnings by 5 cents per share in 2014. There will be no major impact on 2013 earnings.
Massachusetts-based Cains sells its products through private label store brands as well as under the Cains, Naturally Delicious and Olde Cape Cod brands. The company supplies to leading food service distributors, national chains and retailers. The deal is thus a strategic fit for TreeHouse, which primarily serves the retail grocery and foodservice channels. Cains’ popular brands will also enhance TreeHouse’s product portfolio, which includes pickles and related products; non-dairy powdered coffee creamer; and other food products including aseptic sauces, refrigerated salad dressings and liquid non-dairy creamer.
The company is keen on expanding its portfolio through acquisitions. It has appointed Harry J. Walsh as the new Executive Vice President for its Acquisitions and Integration unit, which will help the company to expand into new categories and markets.
Some recent acquisitions by TreeHouse include – the aseptic cheese and pudding business from Minnesota-based dairy marketing cooperative Associated Milk Producers Inc. in Nov 2012 and Atlanta-based food company, Naturally Fresh, Inc., in the second quarter of 2012. These acquisitions played an important role in pulling up the company’s revenues in the first quarter of 2013, results of which were announced in May this year.
Other Stocks to Consider
Other stocks in the food business that are currently doing well and are worth considering include Flower Foods Inc. (FLO - Snapshot Report) , Omega Protein Corp. (OME - Snapshot Report) and B&G Foods Inc. (BGS - Snapshot Report) , all carrying a Zacks Rank #1 (Strong Buy).