Saturday, October 18, 2014

Three Gluten Free Stocks for Investors (BDBD, GIS & GIGL)

If you are looking for way to invest in the trend towards gluten free food, small cap Boulder Brands Inc (NASDAQ: BDBD) is probably the closest thing to a pure play gluten free stock while large cap General Mills, Inc (NYSE: GIS) and small cap Giggles N Hugs Inc (OTCMKTS: GIGL) offer exposure to consumer trends away from gluten. To begin with, a gluten free diet or product will exclude gluten, a protein composite found in wheat and related grains such as barley and rye that is believed to cause health problems for sufferers of celiac disease (1% of the population), non-celiac gluten sensitivity (as many as 18 million Americans) and some cases of wheat allergy. Many Western consumers are adopting a gluten-free lifestyle whether or not they have actually been diagnosed (by a doctor) with CD or gluten sensitivity. With that in mind, here is a look at three gluten free stocks or potential plays on the gluten free fad:

Boulder Brands Inc. One of the largest natural consumer packaged food companies in the United States that comes closest to being a pure play gluten free stock, Boulder Brands Inc's health and wellness platform consists of brands that target specific health trends: the Glutino® and Udi's Gluten Free brands for gluten-free diets; the Earth Balance brand for plant-based diets; the Level Life brand for diabetes-friendly diets, EVOL foods for consumers seeking simple and pure ingredients; and the Smart Balance brand for heart healthier diets. In addition, Boulder Brands Investment Group, LLC (BIG) was formed as a partnership between Boulder Brands Inc and Bill Weiland, the Founder and CEO of the largest natural foods brokerage in the US: Presence Marketing. BIG targets early-stage growth companies in the natural and organic food & beverage sectors and helps them succeed through a combination of capital and corporate resources. In early August, Boulder Brands Inc reported earnings an 18.7% net sales increase to $131.3 million as organic net sales increased 19.4% and organic consumption growth increased 17.2%. The Company's gluten-free brands, Udi`s and Glutino, reported net sales growth of 33.7% and 9.3%, respectively, driven by distribution gains for Udi's and continued strength in the gluten-free category. EVOL also reported a strong organic net sales increase of 131.2% - led by distribution gains. The Chairman/CEO commented:

"The Natural segment, which includes Udi`s, Glutino, and EVOL, represented 61% of our total net sales and reported a strong organic net sales increase of 34.8%. Our Balance segment organic net sales increased 1.4%, and brand profit and brand profit margin for the Balance segment both increased in the second quarter.  Our transition to Non-GMO spreads is complete and Smart Balance Spreads are now entirely non-GMO across all accounts. In addition, Earth Balance continues to have momentum in the spreads category and conventional retailers are looking to expand Earth Balance placements.  Overall, I`m pleased with our progress.  The combination of continued strong organic growth and a rebound in gross margins should result in a strong finish to 2014."

On Wednesday, small cap Boulder Brands Inc rose 3.03% to $12.60 (BDBD has a 52 week trading range of $11.01 to $18.46 a share) for a market cap $750.36 million plus the stock is down 22.3% since the start of the year, down 23% over the past year and up 106.9% over the past five years.

General Mills, Inc. Among the world's largest food companies, General Mills has hundreds of gluten free products plus the company recently acquired Annies Inc (NYSE: BNNY), a producer of branded organic and natural food products, for $46 per share in cash or approximately $820 million. Annies Inc will join General Mills' US natural and organic products portfolio, which includes the Cascadian Farm, Muir Glen, Larabar and Food Should Taste Good brands. In addition, General Mills does its best to stay on top of all the latest consumer-driven food trends – including offering gluten free versions of its existing products. For example: In July, General Mills announced the addition of the following products to its gluten free portfolio: Chex Gluten Free Oatmeal. Betty Crocker Gluten Free Pizza Crust. LĂ„RABAR RENOLA. Food Should Taste Good Brown Rice Crackers.

On Wednesday, large cap General Mills fell 0.82% to $49.11 (GIS has a 52 week trading range of $46.70 to $55.64 a share) for a market cap of $29.55 billion plus the stock is down 2% over the past year, up 0.39% over the past year and up 48.4% over the past five years.

Giggles N Hugs Inc. Small cap Southern California based restaurant stock Giggles N' Hugs is an indirect play on the gluten free and/or organic/natural foods lifestyle as its the first and only restaurant that brings together high-end, organic, nutritious and reasonably priced meals (including gluten free items) with active, cutting-edge play and entertainment for children.

For adults and children alike, Giggles N' Hugs restaurants feature high-quality menus made from fresh and local foods in an upscale, family-friendly atmosphere. For children 10 and younger, restaurants have a dedicated play area that creates a fun, casual and family atmosphere plus there is nightly entertainment such as magic shows, concerts, puppet shows and face painting along with party packages for families. Currently, the company owns and operates one restaurant in the Westfield Mall in Century City, California; a second restaurant in the Westfield Mall in Topanga, California; and a third restaurant in Glendale Galleria in Glendale, California. In the future, Giggles N' Hugs plans to open a number of themed restaurants in high end malls throughout the country – either using a franchising model or company owned stores. Giggles N' Hugs is also developing new products and services such as curb-side take-out, a beer/wine license, furniture and equipment referrals through a partnership with a baby products supplier to receive commissions for each referral, baby food, merchandising and gift certificates. Its worth noting that Giggles N Hugs has been:  

Voted the #1 birthday party place in Los Angeles by Nickelodeon. Voted "Best Pizza in Los Angeles" by Nickelodeon. Listed best family & kid-friendly restaurants by CitySearch and GoCityKids.

Moreover and thanks to its Southern California base, Giggles N Hugs has an entire page on its website dedicated to its Hollywood celebrity customers. On Wednesday, small cap Giggles N' Hugs rose 14.29% to $0.24 (GIGL has a 52 week trading range of $0.10 to $2.00 a share) for a market cap of $8.82 million plus the stock is up 27.3% since the start of the year and up 16.7% over the past year.

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