Today I posted my two-hundred-and-ninety-fourth YouTube Video: Quick Pick TreeHouse Foods
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This week’s Quick Pick is TreeHouse Foods (THS). TreeHouse Foods makes private brand goods for grocers and other retailers to sell. Not a bad business when consumers are trying to beat inflation and retailers are fighting to preserve margins. Margins are better, and prices are lower, making these private brands more attractive to a consumer dealing with inflation around 4-5%. The second reason behind  this pick is that it’s a turnaround story. TreeHouse bought the private brands of ConAgra,  which killed earnings and over-leveraged the company. TreeHouse has clawed tits way back by selling their meal prep business, and paying off $800 million of debt in the last three years, bringing their leverage down to 3.2%. Sales were up this quarter by 15% and they turned (operating) profitable on a GAAP basis with $39 million operating profits and GAAP earnings of 27 cents a share. Through the turnaround, the stock has been very volatile, but over time, it looks like the turnaround is working. Morningstar reports TreeHouse to be trading at a 7% discount and it’s trading at a cheap price-to-sales price below one. You’ll have to be patient with this one, but the turnaround is working and it’s a great stock for an inflationary period.
Here’s the link:
