SMBL has only nine analysts covering it and of them seven have buys and two have holds. To put SMBL into context, WFM trades at 47x TTM, TFM @ 39x TTM, and UNFI @26x TTM (UNFI recently regained its 200-day moving average). It is also important to put this SMBL rally into prospective too, for SMBL was a $6.00 stock a mere 130 trading days ago.
RBC is quite bullish on SMBL, for it was on their ‘top picks’ list and they have a $16.00 price target. RBC notes that SMBL has jumped on the gluten free and plant based packaging train. These two trends represent strong growth areas. According to the firm, “SMBL is on the cusp of being a beat-and-raise story for the first time in its history as a public company.”
SMBL distributes through many channels, for example WFM. UNFI, the cheaper multiple stock, on the other hand, has “several operating divisions aggregated under the wholesale segment, which is the company’s only reportable segment (meaning the other segments are not material – not quantitatively large enough- to report them individually). These operating divisions have similar products, services, customer channels, distribution methods, and historical margins,” according to the UNFI 10-Q. Basically, the wholesale segment distributes natural and organic, specialty foods, produce, and related products to the USA and Canada. “Other” includes a retail division, manufacturing plant (roasted nuts, seeds, dried fruits etc), and corporate expenses account necessary to operate.
The average price target for SMBL is $14.00, and considering we are trading around $12.50, this may not be a very good risk-reward trade. SMBL, along with stocks like ABT, should be on one’s watch list if/when we call off the cliff.
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