Dow Jones Industrial Average 12092.15 (UP) Week Ending 02-04-2011
Appaloosa Management has started a brand new position in Dean Foods (Symbol DF, $10.35) for 2011 per a 13G statement filed with the SEC. The hedge fund has disclosed a 7.35% ownership stake in DF with 13,396,536 shares due to trading on December 28th, 2010.
According to the Dean Foods website
"Dean Foods is one of the leading food and beverage companies in the United States and a European leader in branded soy foods and beverages. The Company's Fresh Dairy Direct-Morningstar segment is the largest U.S. processor and distributor of milk, creamer, and cultured dairy products. These offerings are marketed under more than 50 local and regional dairy brands, as well as through private labels.
The WhiteWave-Alpro segment produces and sells an array of branded dairy, soy and plant-based beverages and foods. WhiteWave brands, including Silk® soy and almond milk, Horizon Organic® milk and dairy products, International Delight® coffee creamers, and LAND O'LAKES® creamers, are category leaders and consumer favorites. Alpro is the pan-European leader in branded soy food products."
This is what I think: Dean Foods stock price was $46.95 in March, 2007
and had made a steady descent down to $7.31 in December, 2010. The company annual sales are 12 Billion, the same as they were in 2007. That gives you $65.72 in sales revenue for every $10.40 share of stock and a lot of value. They are big enough that a Kraft Foods (46.5 Billion revenue) or a UNILEVER ADR (42.5 Billion revenue) or even Hershey Foods (5.5 Billion in revenue) might have an interest in getting together with them for a merger. The "Silk" category of beverage should have explosive growth this year and is certainly more profitable business than traditional milk sales.
Dean Foods will have its fourth quarter earnings conference call on February 16th. Wait till then to take action. If the stock goes down after that call, buy it and trade it back up to this current $10+ price. If the call goes well, and the stock price moves up, it will have broken through this resistance level and should move to the $13 - $16 price level , a nice percentage gain, so buy it. If the stock does nothing, you should do nothing.
I send my best wishes out to all the American Dairy farmers in the US. The dairy farm is a beautiful sight when you ride down the road and go by them. I especially cheer the family dairy farms carrying on their long tradition. I appreciate your hard work and long hours and hope that your business is successful.
So try some International Delight with your coffee and buy some Dean Foods if the right conditions occur.