Investors usually prize food and beverage stocks for factors
such as dependable and growing dividends, predictable earnings
and the sector's reputation for having a low beta relative to the
broader market. At least those are the reasons why investors
covet large-cap food and beverage names such as General Mills
(NYSE:
GIS
) and Coca-Cola (NYSE:
KO
).
However, the food and beverage space offers more than just
stodgy, slow-growth blue-chip names. Traveling down to small-caps
and even micro-caps does mean incurring additional risk, but with
that trade-off comes the potential to generate impressive
returns. Yes, even with food and beverage stocks. Here are a few
examples investors may want to put on their plates.
Rocky Mountain Chocolate Factory (Nasdaq:
RMCF
) Colorado-based Rocky Mountain Chocolate Factory operates as a
confectionery manufacturer, franchisor, and retail operator in
the U.S. and around the world. As an indicator of how much
investors have warmed to this name, the company now has a market
value of $71 million compared with just $57 million 10 months
ago.
That means this is a micro-cap stock, but Rocky Mountain
Chocolate can say two things that many micro-caps cannot. First,
the company is consistently profitable. Second,
the company is debt-free
.
Additionally, the company is expanding into high-growth
emerging markets such as China and has plans to open stores in
parts of Southeast Asia. Not to mention, some of Rocky Mountain's
important statistics compare favorably with Hershey (NYSE:
HSY
). For example, Rocky Mountain trades at 13.5 times forward
earnings with a dividend yield of 3.74 percent. Hershey trades
for
21.7 times forward earnings with a yield of just
2.16 percent
.
National Beverage (NASDAQ:
FIZZ
) Florida-based National Beverage makes and sells soft drinks,
energy drinks and shots, juices, teas, still and sparkling
waters, and nutritionally enhanced beverages, as well as produces
soft drinks. Coca-Cola or PepsiCo (NYSE:
PEP
) this is not, but that does not mean this sub-$650 million
company does not have something to offer investors.
Like Rocky Mountain Chocolate, National Beverage is debt free
and that has helped the company pay out almost $8.90 a share in
special dividends over the past decade. Reinvesting those
dividends would have helped investors
garner returns well in excess of those offered by
Coca-Cola
over the past twenty years.
And like Rocky Mountain, National Beverage is an example of
small-cap offering better key statistics than a more
recognizable, larger rival. National Beverage has a return on
assets of 21.5 percent,
return on equity of 35.3 percent and a return on
investment of 30.4 percent
. For Coke, those numbers are
10.5 percent, 26.5 percent and 15.4 percent
.
Lancaster Colony (NASDAQ:
LANC
) With a market value of exactly $2 billion, Lancaster Colony
could graduate to mid-cap status at any moment, but that does not
change the fact that this low-beta (beta of just 0.32) dividend
play is worth a look. The company owns the Marzetti, T. Marzetti,
Cardinis, Pfeiffer, Simply Dressed, and Girards brands among some
other recognizable labels and like the other names on this list
has no debt
.
While the yield is not great (2.1 percent), income investors
should note that Lancaster Colony has grown its
dividend by 5.7 percent annually over the past
five years
and is in the midst of a five decades long dividend increase
streak.
The shares are up 15 percent in the past year, roughly double
the returns offered by General Mills.
(c) 2013 Benzinga.com. Benzinga does not provide investment
advice. All rights reserved.
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