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Dean Foods: Cash cow
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Shares of Dean Foods have surged this week, rising 12 percent after the company reported better-than-expected earnings and issued strong guidance.

But analysts say investors can still squeeze more money out of the milk stock.

"Prices are now higher and profits are just starting to flow through, and we think there's a lot more to come in the quarters and years ahead," Athlos Research principal Jonathan Feeney said Tuesday on CNBC's "Trading Nation."

In its annual report Monday, Dean Foods CEO Gregg Tanner wrote that the prior year has been "the most difficult year in our company's history, and the most difficult operating environment we've ever experienced," with high milk prices and shifting consumer behavior hurting the business.

It may not be out of the woods just yet. As the company has acknowledged, nutritional, dietary, and environmental concerns threaten to hurt demand for Dean's products—which include milk, and not-so-healthy foods like milk shakes, ice cream and butter.

"Milk drinking as a behavior has been declining," Feeney said. "And this is the big debate: How much of that was high commodity prices, and how much of that is changed behavior? Whether it's millennials finding new ways of getting protein, poor marketing, people have other drink options in schools. … It's really been all of the above, as per capitas have declined for the past 10 or 15 years."

Read More Dean Foods' 'DairyPure' aims to make milk relevant again

Source: Dean's

But Dean, the leading milk seller with some 35 percent of the national market share, is embarking upon a serious turnaround effort, reducing costs by closing plants and taking other measures. And Feeney believes the company should be able to bring its profits back to historical average levels.

"I see a company that has about $2 or so sustainable cash flow," Feeney said. "I don't see why a company like that can't trade about 15 times" cash flow, which would imply a stock price of $30 on the stock.

Dean Foods closed Tuesday trading at $18.29.

Looking at the charts, Ari Wald of Oppenheimer said the stock is running into technical resistance at the $20 level. However, if it does break up perceived resistance at the $20 to $22 level, then "we can start talking about $30," the technician said.

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