Why Flowers Foods' Shares Jumped
Nov 16th 2012 4:54PM
Updated Nov 16th 2012 5:00PM
Although we don't believe in timing the market or panicking over market movements, we do like to keep an eye on big changes -- just in case they're material to our investing thesis.
What: Shares of baked goods maker Flowers Foods (NYS: FLO) jumped 11% today, on speculation that it may buy some attractive assets.
So what: This morning's announcement that Hostess, maker of Twinkies and an assortment of other snacks, would liquidate its business has buyers circling the company. Someone is sure to buy assets like Hostess's brands, and Flowers Foods is a prime candidate.
Now what: The elimination of Hostess does reduce competition in the baked goods business, which may be a slight positive for Flowers. But speculation that the company will buy Hostess's assets is just speculation at this point. I don't see this being a long lasting pop and, with shares trading at 20 times next year's earnings estimates, I'm not a buyer on speculation today.
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The article Why Flowers Foods' Shares Jumped originally appeared on Fool.com.Fool contributor Travis Hoium has no positions in the stocks mentioned above. You can follow Travis on Twitter at @FlushDrawFool, check out his personal stock holdings, or follow his CAPS picks at TMFFlushDraw. The Motley Fool has no positions in the stocks mentioned above. Motley Fool newsletter services recommend Flowers Foods. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.
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