A Small-Cap Stock To Buy Right Now…
With the market hitting new highs recently, investors should be weary of small-cap stocks. That’s because when the market inevitably turns, it’s usually smaller stocks that lead the charge in either direction.
#-ad_banner-#But while investors should be cautious about small-cap stocks in general, my colleague Andy Obermueller has identified one that could be an exception.
Back in August of last year, Andy highlighted a little-known company called Amplify (NYSE: BETR), an Austin, Texas-based snack food company.
Amplify’s best-selling product is Skinny Pop, a healthy form of popcorn. But it also makes a host of other health-conscious foods for consumers. When Andy originally wrote about Amplify, he issued an immediate “buy” recommendation on the stock, which had recently gone public.
Andy recently confessed to his Game-Changing Stocks readers that his timing was perhaps a little bit off, but anyone who followed his recommendation is still sitting on a nice gain:
| “Looking back, I can see — and feel obligated to confess — that I made an error in my timing. As with many IPOs, the market created future entry points far more attractive than the pricing available at the time of my recommendation. I erred further in failing to recommend shares as these buying opportunities presented themselves. I feel a modest sense of redemption in that fact that the shares have outperformed the S&P 500, if only by five percentage points. And I do believe, going forward, that they have equal promise to continue to outperform.” |
Andy cites two reasons for his ongoing confidence in Amplify:
| “One reason for this is that Americans are snacking more — far more. The very definition of “meal” is under review, and the times at which we tend to eat are also changing, hence the new hipster term “snackfest.” Snacks are typically chosen for convenience first, though nutrition is a second. Popcorn is a whole grain and is considered high fiber — and each serving also has 3.5 grams of protein, which is the key to selling any snack these days. Amplify delivers these in an extremely convenient format. The second reason is the absolute explosion of Kind bars. Kind bars sort of appeared out of nowhere and are now seemingly EVERYWHERE, and the company has experienced growth that makes me green with envy. “It is estimated that their sales surged from $15 million in 2008 to $120 million in 2012, and more than tripled in the years following.” (See below) The bad news is that you can’t buy into Kind bars, which are privately held. The good news: The same “clean label” appeal of these snacks (no weird chemical additives, preservatives, etc) is mirrored with Amplify’s product lineup, which has only three ingredients. And while its sales aren’t quite burgeoning like Kind’s did, they are still on the rise. Sales last year rose nearly 40%, to $183 million. If it hits $350 million on the top line in two years and maintains the level of profitability it achieved in the most recently reported quarter, these shares, in my view, will easily tack on an additional $500 million in market cap — and that’s at the current market’s valuation of a dollar’s worth of earnings. Plus, that adds up to where Wall Street values fast-growing juggernauts like Amplify, and an additional half-bill in market cap is merely a modest starting point.” |
If you’re looking for an off-the-radar smaller company to add to your portfolio, then consider Amplify Snack Brands. It’s riding the wave of a huge growth trend (health snack foods) and, in my estimation, should be largely insulated from macro swings in the overall economy.
Andy’s advice: Don’t make the same mistake he made: Wait for favorable pricing. He says shares are a good buy under $14.75 and a great buy under $14. Keep a little cash on hand as dry powder just in case the overall market takes a dive, and scoop up these shares when they’re sharply discounted. You’ll be glad you did.
Editor’s Note: Earlier this year, there were whispers that a group of scientists funded by eccentric tech billionaire Elon Musk finally succeeded in building a storage device capable of harnessing massive amounts of energy. In this special presentation, Andy tells readers everything they need to know this game-changing development. You’ll also get the names and ticker symbols of his three favorite companies behind this technology, which could have even more upside than Tesla in the years ahead. To view the presentation, follow this link.