Seeking Alpha: The Amira Nature Foods Story Is Coming Along Nicely

My January 7 call to buy Amira Nature Foods (ANFI) didn't work right away (the shares did dip back below $7 a few times), but patience has paid off as the shares are up more than 90% on a year-to-date basis. I'm sure there will be those investors and readers who will continue to avoid Amira due to the working capital-intensive business model that the company's operations require, but I take the position that the growing share of basmati rice in the world's rice consumption, as well as the company's efforts to push branded sales through sizable retail channels like Costco (COST) in the U.S. and Morrisons (OTC:MRWSY) in the U.K., more than compensate for those concerns.

All of that said, while I'm happy to take a victory lap on a successful call, I'm not necessarily eager to double-down on that pick. Even mid-teens revenue growth and a free cash flow margin in the mid-single digits only gets me to around $15 per share in fair value (up from about $10.50 when I wrote back in January). While I may be too harsh with my discount rate (a 1% reduction would push the fair value to $17.50), this is still a business with commodity, currency, and political risk, to say nothing of execution risk when it comes to the company's up-market retailing plans.

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The Amira Nature Foods Story Is Coming Along Nicely

Investopedia: Canadian Dilution And Sluggish U.S. Shopping Bring Target A Little Wide Of The Mark

When Wal-Mart (NYSE:WMT), Target (NYSE:TGT), and Costco (Nasdaq:COST) all see relatively uninspiring same-store sales growth trends, I think it's safe to say the U.S. retail market is not in the best of health. Although Target continues to take steps that should improve the company's long-term competitiveness and growth profile, Wall Street is generally very much focused on the now and underperformance creates some challenges for the shares.

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Seeking Alpha: Amira Nature Foods Looks To Become A Major Emerging Market Brand

At first blush, Amira Nature Foods (ANFI) looks as though it may offer investors two relatively rare opportunities - a direct investment in India and an investment in a relatively early-stage food brand. While there are abundant risks with this name, this is also an uncommon opportunity. Investors may benefit not only from the rising consumer income levels in emerging markets, but also a food company that is at a point in its lifecycle where both revenue growth and margin leverage are up for grabs.

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Amira Nature Foods Looks To Become A Major Emerging Market Brand

Investopedia: Bull Vs. Bear - A Deal For The Fiscal Cliff Won't Be Finalized Before The End Of December

Question: Is a deal for the fiscal cliff going to happen?

Bear's Response
When considering the question of the upcoming "fiscal cliff" (the expiration of various tax cuts and the simultaneous automatic cuts across a variety of federal budget items), I'm reminded of a famous quote from Winston Churchill, "Americans can always be counted on to do the right thing ... after they have exhausted all other possibilities." While I do believe Congress will have little choice but to find a compromise that undoes the growth-damaging combination of higher taxes and lower spending, it will not come until 2013.

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Investopedia: A Few Hiccups Aren't Going To Derail Costco

As one of the strongest retailers in the United States (not to mentioned one of the best-liked), Costco (Nasdaq:COST) already has a lot going for it. Not only is Costco already an exceptionally efficient retailer in terms of generating sales per square foot, the company still has ample organic expansion potential in the U.S. and abroad. The down-side to this story is not too surprising - Costco's success and popularity are well-known among investors, and the stock doesn't offer a compelling bargain relative to expected above-average growth rates.

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Investopedia: If You Can't Beat The Taxman, Outrun Him!

Economic theorists warn that fiddling too much with tax policy provides incentives for market participants to devote time and energy to managing their tax exposure, as opposed to going about the productive work that generates that taxable income. The last few weeks have suggested that those theorists are onto something, as a variety of companies make moves designed to end-run the upcoming changes in tax policies tied to the fiscal cliff.

Many companies, including Costco (Nasdaq:COST), have announced special dividends to be paid ahead of the year-end as a means of transferring more cash to shareholders before taxes on such distributions increase significantly. Now a host of companies are making slightly less dramatic, but still significant, changes to the timing of their dividend payments in order to avoid at least some of the effects of the fiscal cliff.

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Investopedia: Big Valuation/Small Miss Wrong Combo For The Fresh Market

What's going on in the wake of the third-quarter earnings report from The Fresh Market (Nasdaq:TFM) will be altogether familiar for veteran investors. Here we have a great growth company, perhaps one of the best growth plays today on the mass-affluent customer category, but with a stock that carried nosebleed valuations. Q3 earnings showed a hiccup in store traffic and margin leverage, and the stock got pummeled. Although I still like the growth story at The Fresh Market just fine (as well as the stores themselves), I'm still a long way from liking the stock.

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Investopedia: Green Mountain Coffee Roasters Gives The Street A Jolt

Apparently reports of the demise of Green Mountain Coffee Roasters (Nasdaq:GMCR) have been at least a little exaggerated. While the market pioneer for single-serve coffee brewing has some formidable challenges coming from increased competition, it's worth remembering that the consumer products market is not like the prescription drug market where generic launches immediately drive prices into the cellar. That said, it's not as though Green Mountain's valuation marks this out as an especially cheap stock today.

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Investopedia: Wal-Mart's "Meh" Quarter Doesn't Excite Investors

This has been a better year for Walmart's (NYSE:WMT) stock than many of its customers, as the stock has more than doubled the return of the S&P 500. While Walmart did have a solid back-to-school season and is as leveraged as anybody to improving consumer conditions (and confidence), the sluggish comp numbers suggest that the company is not completely out of the woods. 

 

Decent, but Not Great, Third Quarter Numbers 

Walmart's earnings always get a lot of attention, given its enormous position within the United States retail sector. To that end, Walmart's numbers may be a good reminder that, while the worst may be over, that's not the same thing as saying that the good times are back.

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Investopedia: Should Best Buy Shareholders Take The Money And Run?

I don't believe it surprised anyone when the board at Best Buy (NYSE:BBY) didn't exactly leap for joy at the receipt of a go-private bid from Best Buy's founder (and largest shareholder) Richard Schulze. Likewise, I'm not sure many investors will be surprised that the company once again posted a very disappointing quarterly financial performance. Now the question turns to whether shareholders should give newly hired CEO Hubert Joly a chance to work his turnaround magic, or take Schulze's money and move on to new opportunities.

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Investopedia: Costco Living Up To Some High Expectations

One of the problems of having had a lot of success is that it can put expectations at unreasonable levels. That would certainly seem to be a risk for Costco (Nasdaq:COST), as analysts, journalists and commentators have often heaped praise on this warehouse format retailer. While the company may well find it harder to squeeze more efficiencies from an already highly efficient system, the international growth opportunity alone makes this a name worth watching.

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Investopedia: Staples Seems Stuck

Eventually, even the best-run companies run out of levers to pull when it comes to producing more growth. Staples (Nasdaq:SPLS) is a fine retailer in many respects, and I don't believe that there are many (or perhaps "any") retailers that have built a quality

Unfortunately, Staples is stuck in an oversaturated North American market that just isn't likely to grow fast enough, while the ongoing economic problems in Europe have turned the international operations into a loss-maker. While these shares do indeed look meaningfully undervalued, they could stay undervalued for a quite a while yet, unless management can sell the Street either on new growth plans or a more aggressive cost-cutting strategy.

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Investopedia: Target Needs More Than "Upscale Discounting"

Target (NYSE:TGT) has built a relatively rare business - a discount store format that people don't mind admitting that they patronize. The company may be well past the former glories of the "Tar-zhay" days, and rivals like Kohl's (NYSE:KSS) and Trader Joe's are following similar paths in the multi-line retail and food retail formats, but it still produces reasonable returns. The question for investors, though, is whether management has that spirit of "prudent aggression" that will be necessary to drive the next leg of growth.

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Investopedia: Best Buy Gets Run Over By A Reindeer

For a company that finds itself needing to validate its big-box model and avoid going to the same elephant graveyard as Borders and Circuit City, Best Buy (NYSE:BBY) has certainly stepped in it again, and this time right before Christmas. Several news outlets, including the Wall Street Journal and PCMagazine, are reporting that Best Buy has been unable to fulfill online orders made in the weeks following Black Friday and has instead canceled these orders.

Too Popular for its Own Good?Unfortunately, Best Buy has said almost nothing publicly on this issue apart from an emailed statement to a FOX affiliate in Minneapolis, but from what information is out there, it seems that unexpectedly high demand and supplier shortages have led the company to cancel online orders made in the past few weeks. Looking through message boards and online forums at both Best Buy and shopping websites suggests that it's not a complete disaster and largely limited to items like the Sony (NYSE:SNE) PlayStation and Fujifilm AX-350 camera. Even still, Best Buy was hardly proactive about this and it looks like there are going to be some supremely irritated and newly-former Best Buy shoppers this holiday season. (For related reading, see The 4 Rs Of Investing In Retail.)

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Investopedia: Pier 1 Now A Productivity Story

There is no agreed-upon point where a company is no longer a turnaround story, but there are plenty of anecdotal reasons to believe that Pier 1 (NYSE:PIR) has moved on to become a productivity improvement story. The company has logged several quarters of impressive same-store sales growth, completed a share buyback and begun to talk again about store count expansion and new selling concepts. Still, even if Pier 1 is no longer a true turnaround, investors may well be able to expect quite a bit more fundamental upside as the company couples better merchandising with improved efficiency.

Solid Fiscal Q2 Results   
For the company's fiscal second quarter, Pier 1 reported that total sales rose nearly 10% to just under $340 million. On a comparable basis, sales grew 10.8% (against a difficult 11.2% growth comp last year). On a per-square-foot basis, sales grew about 10%. Unfortunately, management did not give a detailed breakdown of traffic and ticket trends other than to say that both were positive.


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Investopedia: Best Buy Needs To Tune Out The Haters

Much to the chagrin of a lot of shorts, hedge funds and commentators, Best Buy (NYSE:BBY) stubbornly refused to go out of business this past quarter. That's hyperbole, of course, but perhaps not by much - there is no shortage of commentary out there saying that Best Buy is utterly doomed, needs to close stores and/or start subletting space in order to survive. (Learn more in The 4 R's Of Investing In Retail.)


While it is true that Best Buy is indeed going through some hard times and it likewise true that consumer buying preferences have changed, a panicked attempt to pacify institutions is not what the company or its shareholders need. Best Buy is still producing positive cash flow has not yet reached a point of no return.

Challenging and Disappointing Second Quarter Results
That is not to say that Best Buy is doing well, as it clearly is not. Revenue was flat for this quarter (the company's fiscal second quarter) despite a nearly 3% decline in comp-store sales. Although domestic sales were down (down 1.5% on a 2.7% comp decline), international sales rose 4.6% despite a greater-than-3% decline in comps.



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Investopedia: Can Barnes & Noble Change One More Time?

One of the most dangerous things investors can do is confuse what they want to happen with what is most likely to happen. Barnes & Noble (NYSE:BKS) is a good example of that Achilles heel for me - I'm a book nerd and very much want this company to succeed. The trouble is, though, that Barnes & Noble's market has changed dramatically, Amazon (Nasdaq:AMZN) and Apple (Nasdaq:AAPL) are formidable competitors, and a sober and unemotional reading of the evidence suggests little more than "maybe" when it comes to the question of whether this company can make it.

Another Tough QuarterUnfortunately, Barnes & Noble's fiscal first quarter results don't offer a lot of encouragement. BKS missed the consensus with its revenue performance, as sales rose a little less than 2% this quarter. Retail revenue was down almost 3% (on a nearly 2% negative comp), while BN.com revenue rose 37% and revenue from the college business fell about 2%.

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Investopedia: BJ's Goes Bye-Bye

To see the announcement that BJ's Wholesale Club (NYSE:BJ) had agreed to sell itself was only slightly more surprising than Thursday following Wednesday. For starters, this warehouse retailer has been a laggard behind Wal-Mart's (NYSE:WMT) Sam's Club and Costco (Nasdaq:COST) for quite some time and laggards in attractive industries are always appealing takeout candidates. What's more, rumors, speculations, aborted offers and announced intentions have been preparing shareholders for a deal for at least a few years now.

The Deal That BJ's Got
BJ's announced that it will sell itself to private equity parties Leonard Green & Partners and CVC Capital Partners in an all-cash deal worth $2.8 billion. That means $51.25 per share - only about a 7% premium to Tuesday's close, but a 38% premium to the price before LGP took a significant ownership stake and very close to the all-time high for these shares.

Even at this price, though, BJ's is not exactly bowing out with a premium valuation. At only a little more than six times trailing EBITDA, BJ's is going at a valuation close to slow-growing Wal-Mart and Target (NYSE:TGT) and well below rival Costco and a wider universe of value-oriented retailers like Family Dollar (NYSE:FDO) and Dollar General (NYSE:DG). What is interesting, too, is that on a discounted cash flow basis this price does not anticipate much in the way of dramatic improvement - if LGP and CVC can really turn this business around, they will get the vast majority of the benefit.

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Investopedia: ConAgra Still Not Very Appetizing

When it came to light a little while ago that ConAgra (NYSE:CAG) was interested in acquiring Ralcorp (NYSE:RAH) and really focusing on private label food, it made a lot of sense. With another quarter in the books, it is increasingly clear that they may be ConAgra's only real chance of competing - this company just cannot gain much traction in the supermarket and has done little to improve a portfolio of brands that lacks leaders. (For more on supermarket stock, check out Evaluating Grocery Store Stocks.)


A Weak Close to the Fiscal Year
ConAgra's press release boasts of "strong" comparable growth, but I have to wonder what definition of "strong" the company is using. Yes, revenue was up over 5% this quarter and that's not bad for a large food company. What ConAgra management is glossing over, though, is that sales in the year-ago period were down about 5%, so the comp was especially easy. In fact, sales in this quarter were still lower than in 2009, so just exactly how strong does ConAgra think their business is? It is worth noting, though, that this is the first positive comp after four straight negative quarters.

Looking further at the top line, the consumer business saw less than 1% growth as a modest boost from pricing was overwhelmed by a fall in volume. Commercial sales were much stronger, though, and climbed about 14%.


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Investopedia: Optimism Already Built Into United Natural Foods

There is nothing new about the organic food industry anymore, and investors are already well-attuned to the big names like Whole Foods (Nasdaq:WFM) and leading distributor United Natural Foods (Nasdaq:UNFI). The question, though, is whether there is still enough runway in front of UNFI to make the stock a worthwhile addition or holding for growth-oriented portfolios. While it is true that many major supermarkets like Kroger (NYSE:KR) and warehouses like Costco (Nasdaq:COST) could go even further in stocking more organic products, much of this seems to already be factored into UNFI's stock price. 

A Good Third Quarter, But With a Few Spots 

For the most part, United Natural Foods had a solid fiscal third quarter. Reported revenue rose more than 22%, while revenue rose more than 12% on a like-for-like basis. While better than 10% growth from major customer Whole Foods was a bit below average, UNFI did see nearly 20% like-for-like sales growth in the conventional supermarket category. (For more insight, see Organic Food For Thought.)

Unfortunately, that supermarket growth comes at a bit of a cost, because it is not as profitable as UNFI's more traditional channels (smaller organic-focused chains with much less bargaining power). Gross margin slipped about 30 basis points as a result. UNFI made some of this up through operations, though, and 15% operating income growth mitigated the operating margin erosion to about 20 basis points. 

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