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Stocks J / John B. Sanfilippo & Son
|Subject: Re: what happened here?||Date: 4/2/2004 9:40 PM|
|Author: TMF1000||Number: 10 of 15|
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JBSS made quite a run. The correction of late is part profit taking, part losing its place on the IBD100. But another factor is more peanuts will be planted in the US in 2004 as farmers attempt to cash in on the higher prices.
U.S. peanut producers intend to plant 1.37 million acres of peanuts in 2004, up 2 percent from last year. Of the nine producing States, six intend to plant more acres than in 2003. Southeast growers (Alabama, Florida, Georgia, and South Carolina) intend to plant 933,000 acres, up 6 percent from last year. In the Virginia-North Carolina region, producers intend to plant 137,000 acres, up 1 percent from 2003. Growers in the Southwest (New Mexico, Oklahoma, and Texas) intend to plant 296,000 acres, 10 percent below 2003
Peanuts are a large portion of JBSS sales, but they also have other products, cashews, almonds, and pecans. Their prices are doing quite well and will probably continue to as long as popular low carb/high protein diets remain popular.
Higher fuel cost too affect the shipping costs related to shipping these commodities. Many of their nuts are shipped from overseas.
In the last conference call, David Rosen, Whitney And Company's analyst, raised fears that Walmart, JBSS largest customer, might pressure JBSS to lower their prices. This is an ongoing concern since lower prices would affect margins and earnings and cause investors to be a bit shy about paying too much for the stock.
The above represent many of the factors that affect the company and some represent unknowns that help cause volatility.
Nevertheless, net income grew 24% in 2Q and that is pretty good for a stock with a PE of 16. Companies that sell commodities tend to have low PE ratio because the prices for these commodities tend to be volatile and unpredictable.
These are the items I believe are putting pressure on the stock price.
I hope this helps a bit.
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