A ‘Terrific’ Speculative Stock
Picking great stocks is all about finding companies that solve big problems, Cramer said Friday. “At the moment, there is no problem that is bigger or more intractable than the obesity epidemic.”
That’s why Cramer believes SunOpta, which produces natural, organic and specialty foods, is a terrific way to speculate on the bull market in healthy eating. The Canadian company does the bulk of its business with Whole Foods, Costco, Hain Celestial and Starbucks, all Cramer-approved healthy living plays. However, the high level of customer concentration is one of the reasons the “Mad Money” host believes this stock is speculative.
The healthy eating business has been good for SunOpta. Last month, the company reported its earnings were in-line at eight cents a share and its revenues were better than expected, rising over 20 percent year-over-year. Its organic sales growth came in at up 9.7 percent.
What’s more, SunOpta’s operating margin held up in spite of higher commodity costs and the company is getting more streamlined.
STKL is also cheap, Cramer said, trading just 14.4 times next year’s earnings estimates, even though it has a 30 percent long-term growth rate. It also trades at about a 25 percent discount to other Cramer-fave health food names.
The reason SunOpta is inexpensive is because it’s difficult to understand. The food business, which accounts for over 90 percent of its sales, is a combination of 23 different food companies that have been built up through acquisitions. The company also has an industrial minerals business, which makes up nine percent of sales.
The minerals business is doing well, Cramer said. So while it seems like a strange combination, it's one that is working for SunOpta.
So take the weekend to get comfortable with STLK if you are interested, Cramer said, and then wait for a good price to buy.
“You will not make money if you buy SunOpta up big on Monday, but it could be a strong spec as long as you're patient with it.”
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