An investor interested in diversifying their personal portfolio, might want to consider an investment in a company that has a worldwide distribution of a variety of food products. G. Willi Food-International is based in Israel but does a lively trade with a number of nations.
Agriculture has become big business in a growing number of countries in the developing world. As middle classes continue to grow in these new markets and tastes become more sophisticated, it will allow new opportunities to a increasing number of companies.
The established food companies will have the advantage of being first in building brand and taste loyalty as these new markets are exploited. Green Cola is an example of a new product that the company is promoting. It is a carbonated soft drink naturally sweetened by the stevia plant. It has a good flavor, no preservatives, and just 2 calories per serving. The drink is now doing quite well in the international market.
G. Willi Food International was founded in 1994 and only has 140 full time employees. The company has an incredible diversity in product, if one considers the relatively small size of its operations. It buys its products from suppliers from around the world.
The company is engaged in the developing and marketing of a large number of kosher food products (over 600) on a global scale. The company offers canned fruits and vegetables, fish, edible oils, dairy products, nuts, cereals, pastas, pastries and other dessert items. It includes a number of beverages as well,some alcoholic and other non alcoholic ones.
The canned fruits include apricots, cherries, fruit cocktail, litchis, mangoes, peaches, pears, and pineapples.
The vegetables and pickles in canned form include: artichoke, asparagus, beans,corn (baby and kernels), garlic, eggplants (roasted), mushrooms,olives, palm hearts, sun dried tomatoes, and vine leaves. Pickled vegetables include peppers, sour and mixed as well as cucumbers.
Canned fish varieties include anchovies, cod, herring, salmon, sardines and tuna.
Edible oils comprise corn, olive, rapeseed, soybean, and sunflower.
The dairy and dairy substituted offerings include butter and butter spreads, cheese (goat,melted, and alternatives), feta, Bulgarian cubes, fetina and yogurts. Margarine, condensed milk, coffee whiteners, and whipped cream are also part of the offerings.
The dried fruits, beans and nuts sections include apricots, cashews, chestnuts, figs, peanuts, pine nuts, pistachios, sesame and sunflower seeds, and walnuts.
The company also offers soups, frozen edamame soybeans, instant coffee, lemon juice, vinegar, and sauces. Included in the mix are crackers, corn flour, rice and rice sticks, pasta, spaghetti, noodles, frozen pizzas, breakfast cereals, corn flakes, rusks, couscous, gnocchi, tortilla, tea and green cola.
Baked and dessert items can also be found in the form of bagels, bread sticks, halva, Turkish delight, cookies, sweet pastries, frozen pastries, ice creams, dried apple snacks, chocolate bars and paste, and other desserts.
The majority of the items sold by the company are found under the Willi-Food and Gold Frost brands. The headquarters of the company can be found in Yavne, Israel and is a subsidiary of Willi-Food Investments Ltd.
The stock closed on June 02, 2014 at $6.66 USD (United States Dollar). This was an increase of $0.19 USD (2.94%) for the day. The day’s range was between a low of $6.47 USD and a high of $6.72 USD. The previous close was $ 6.47 USD. The volume encompassed 103,831 shares.
The 52 week range is from a low of $6.40 USD and a high of $8.91.
The first quarter sales reported for 2014 advanced 4.9% from the same quarter in 2013. This translated into a $27.2 million USD increase. The gross profit increase for the quarter in comparison to 2013 is 0.1% which equates to $6.1 million USD or 22.5% of sales.
The increase was primarily due to the increased marketing efforts and sales activities of the company. It is also quite evident, that there is a growing demand from domestic and international customers for quality kosher goods.
The practically 5% increase in sales was the highest quarterly sales in the company’s history. However, profit margins still decreased, as a result of a reduction in some of the prices of the product lines in response to customer demand. This unfortunately, corresponded with an increase in the global prices of food products.
The earnings report of the first quarter missed the analyst target by $.06 USD falling to $.16 USD per share price.
Together these forces will likely continue a decline for the company in the gross margin, for business quarters 2 and 3 in 2014.
There is also some concern where the company is actually located. Israel is in the cross roads of major geopolitical disturbances. At present, a significant share of the company’s earnings come from the Israeli market. Although it can now be said that this is changing, with greater growth opportunities arising from outside the country.
Given the challenges that face the company, potential investors may question why this writer is advising an investment in the stock of the company at this time? There are a number of reasons that can be brought forward. It is true that the first quarter earnings report for 2014 is somewhat disappointing. However, this has allowed the stock of the company to drop lower than it’s true valuation. The company still has a great deal of cash still available, because of the stock sales by management earlier this year. This cache of money is also tempting to large investors who may attempt a buyout strategy.
The company is one of Israel’s leading food importers. G. Willi-Food International has about 2,000 business customers in Israel and around the world including large retail and private supermarket chains, mini markets, restaurants, wholesalers and institutional consumers.
Although the company has taken a hit in the home market due to a slow down in the Israeli economy in general, the company because of careful stewardship of it’s management, still has a rock solid balance sheet . The company has $43 million USD in cash available, and has almost no debt with just $5,000 USD reported.
The company is trading at just over 3 times earnings which is quite inexpensive for the industry. A comparison with the Hershey Corporation or Coca Cola have these companies trading at 20 times earnings. The cash in the balance sheet provides $3.30 USD support per share of stock. At today’s stock price that is about 50% of the value of the stock. It is not only a great investment opportunity but one that might lead to a management buyout, or having the company end up going private.
There are corporate plans for expansion in a number of markets including the lucrative American market. Natural and organic foods have become a rapidly growing market there. This has quite naturally attracted a number of new investors.
The value of the money on hand in the company is equivalent to about half the current share stock price. The downside risks become more limited in the $6.00 USD range, but it also makes it a takeover target which could well be quite beneficial to investors if the right suitor makes a bid for the company. This partly has already occurred, when a billionaire recently took a major stake in the company. He paid a significant premium in the acquisition of shares purchased.
It is more likely now that the company may well be bought out completely, thus allowing the remaining shareholders to”cash in” as it were. The billionaire’s investment was based on the company’s potential expansion into the market of the United States and the earning expectations of individual shares.
There is still a general feeling that the company will end up earning $.79 cents per share in 2014 and $1.00 USD for 2015. This is just about 6.5 times forward of earnings. With the cash on hand the stock is basically trading for 3 times earnings.
There are two possible ways to make money off this stock at this juncture. A short term rebound where one will buy low and sell higher, or a longer term investment which may well see a significant increase in sales outside of the Israeli market. This will of course, lead to a major trend upward in the valuation of the stock beginning in 2015 and 2016.