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Analyst Blog

Shares of food manufacturer TreeHouse Foods Inc. (THS - Free Report) hit a new 52-week high of $78.17 on Jun 11, 2014, recording a healthy year-to-date return of 14.0%.

TreeHouse Foods’ share price has been on the rise as investors are encouraged by the strong business momentum of the company.

Growth Drivers

TreeHouse has been posting better-then-expected results for the past few quarters and has also undertaken several strategic acquisitions in order to gain market leadership.

Last month TreeHouse Foods’ first-quarter fiscal 2014 earnings met Zacks Consensus Estimates but surpassed year-ago results by 8.1% backed by higher revenues in all the segments. Net sales went up 6.2% year over year backed by modest growth of single-serve coffee category.

Investors are optimistic as TreeHouse is geared to bolster its presence through strategic acquisitions. The company acquired several foods companies like Cains Foods and Associated Brands in fiscal 2013 which have already started contributing to earnings. The recent Protenergy Foods takeover in May 2014 is particularly encouraging as it is a strategic fit for TreeHouse and will enable it to offer dry and wet soup products in a full range of packaging formats. Moreover, the Protenergy buyout will enable TreeHouse to bolster its position against large food companies like Campbell Soup (CPB - Free Report) and ConAgra Foods (CAG - Free Report) .

Moreover, management is eyeing several acquisitions in the future quarters, which are expected to be accretive to earnings in the coming quarters. .Furthermore, TreeHouse is geared to improve its liquidity and entered into new $1.2 billion credit facility consisting of $900 million revolving credit facility and $300 million term loan. These refinancing activities will boost the company’s liquidity position, thereby allowing it to finance its numerous acquisitions smoothly.

TreeHouse carries a Zacks Rank #3 (Hold). Another stock in the food diversified sector that is performing well and deserves a mention is B&G Foods Inc. (BGS - Free Report) sporting a Zacks Rank #1 (Strong Buy).