Today’s selection is a nutritional ingredient company, who posted a tremendous third quarter profit by expanding its product line and increasing its diversification. The result was larger profit margins, revenues and earnings.
Omega Protein (OME)
from The National Investor
Several months back, the share price of Omega Protein (OME) bounced back and forth when—for a while—the company became the proverbial tennis ball between bulls and bears trying to commandeer the stock price’s direction. In ways it reminded me of the ongoing war where the much higher-profile Herbalife (HLF) has been concerned, in which big investors Bill Ackman (the bear) and Carl Icahn (an HLF bull) have done battle—with Icahn the apparent victor.
Just as the worst fears of Herbalife as a business have been unproven, so too have fundamentals come to the rescue for Omega, breaking a long impasse and period of lethargy for the company’s shares.
Most notably—and encouraging the latest spike—the company reported a gargantuan rise in its third quarter profit to $14 million, or 66 cents per share. This dwarfed both the prior year’s third quarter one cent per share earnings, as well the second quarter’s mark of 19 cents per share.
While revenues rose respectably, most of this was due to much wider profit margins. Where there had been some skepticism over the company expanding its business into human nutrition products to go along with its livestock/animal-oriented core, there now appears to be a realization that the company’s moves have succeeded in making Omega a much more diverse company with, now, record revenues and earnings.
So despite the stock powering fairly quickly to its highest level in about three years and being a bit technically overbought, it remains an “Accumulate.” Indeed, this is an example of the kind of solid companies with solid fundamentals that some of the Tesla, Facebook, Twitter and other money will find its way to in the coming months.
Chris Temple, The National Investor, www.nationalinvestor.com, 715-939-1200, November 15, 2013