If you are an investor looking for stocks capable of growth which will never become unpopular or go “out of style,” the small-cap food stock is an excellent asset to consider. Small-caps offer much better opportunities for growth and enhanced returns and, of course, human beings will always need to eat. For these reasons, these four stocks selected below are well-positioned to capitalize on both of these bullish market trends.
Simply Good Foods Company (NASDAQ:SMPL), of Denver, Colorado, has attracted a good deal of market attention, as Goldman Sachs Group, Inc. (NYSE:GS) recently purchased a 7% stake in the company. Simply Good Foods is emerging as a leader in the snacking space and broader food category, basing many of its nutritional selections on the Atkins diet. All four investment banks providing coverage on the company have the stock listed as a “buy,” and SMPL is currently up 27.42% year-to-date. Momentum is clearly on the side of Simply Good Foods and the median analyst forecasts are calling for the rise of another 21.1% in the upper consensus price targets.
Medifast, Inc. (NYSE:MED) has been on fire in recent months, and the stock has posted incredible gains of 198.7% year-to-date. The company offers an internet-based weight-loss food program, which uses modern marketing techniques to reach potential customers. Medifast offers nutritionally-balanced meal plans and vitamin supplements, which are designed by personalized physicians. The stock actually offers a dividend (0.92%), which is relatively rare for small-cap companies. This provides an added layer of security which should help protect investor returns in the event of a downturn in the broader market. Analyst surveys are still calling for continued upside in share prices, which suggests there is plenty of growth left in MED.
Wingstop, Inc. (NASDAQ:WING) is a company which appeals to the less health-conscious consumer segment. Emerging as a key competitor to Buffalo Wild Wings, second quarter results for Wingstop showed same-store sales growth of 4.3%. This is growth which builds on its already-impressive numbers from the same period last year, and the company says it is positioning itself to become a top-10 restaurant brand globally. These are lofty expectations, but the company’s incredible 26.8% operating margin suggests that high levels of profitability are clearly within reach. The stock is currently up 93.56% year-to-date and it also offers a 0.51% dividend as an added bonus for investors.
Last, we look at BJ’s Restaurants, Inc. (NASDAQ:BJRI), which is a stock with excellent fundamentals and excellent momentum. BJRI is trading higher by 86.81% year-to-date but even with this incredible momentum, the stock is trading at a mere 12.7 times its available cash flow. The company has made significant progress in turning around its business models since last year, and BJ’s showed very solid same-store sales growth of 5.6% in the second quarter. This beat an already strong performance during the prior period (by 70 basis points), and this suggests the stock has the profitability prospects needed to make continued moves higher.
Disclaimer: The author and Spotlight Growth has no positions in any of the stocks mentioned in this article. Nor does either party currently have any relationship, or any other conflicts of interest, with any of the companies mentioned in this article. This content is meant for informational and entertainment purposes only and should not be meant as a recommendation to buy or sell any securities. Please visit a licensed financial representative to determine what investments are right for you.
Article By: Ric Cox