Diamond Foods, Incorporated (DMND) is involved in the processing, marketing, and distribution of culinary, in-shell, ingredient nuts, and snack products primarily in the United States and Europe. The company’s products include shelled nuts, pegboard nuts, glazed nuts, mixed nuts, harvest reserve premium nuts, mixed nuts, roasted nuts, shelled and processed nuts, and custom processed nuts, as well as trail mix and natural snack products.
It sells its products directly to retailers, including national grocery stores, club stores, mass merchandisers, and drug store chains; and indirectly through wholesale distributors, who serve independent and small regional retail grocery store chains and convenience stores. The company markets its ingredient and food service nuts to food processors, restaurants, bakeries, and food service companies and their suppliers. Diamond Foods was founded in 1912 and is based in San Francisco, California.
The company has good fundamentals with strong sales growth and expanding operating margins. The latest earnings per share increased 220 percent to $0.16 compared to $0.05 for the prior year's comparable period. For the twelve months ended July 31, 2008, EPS grew 72 percent to $0.91 compared to $0.53 for the prior year's comparable period.
Net sales grew 1 percent to $113.1 million during the quarter compared to $112.4 million during the prior year's comparable period. North American retail sales, which are the focus of the company's growth efforts, grew 24 percent led by a 39 percent rise in culinary sales. For the twelve months ended July 31, 2008, net sales grew 2 percent to $531.5 million compared to $522.6 million for the prior year's comparable period and North American retail sales grew 11 percent.
The stock is showing a potential Elliot Wave-4 buy projecting gains into the $36.00 per share by the end of March. Diamond Foods does have an options market that currently extends out to June of 2009 allowing the options strategist enough time to take advantage of the forecasted opportunity.
Figure 1: Daily Elliott Wave-4 Buy Pattern for Diamond Foods
(Source: Profit Source)
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Jeff Neal
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