A stock update on Armanino Foods of Distinction

I have written before about Armanino Foods of Distinction (symbol AMNF on the pink sheets). Armanino is a small California company that manufactures various Italian foods and sauces. It is also a major success story.

The reason for my post is that Armanino today declared its regular quarterly dividend. Based upon yesterday's closing price of 80 cents per share, the regular dividend gives a yield of 6.25% per year. But that is not all; Armanino has paid special dividends nearly every years for quite some time. A special dividend could bring the yield for the next year to 7 or 8 percent or even higher. But that is not all; Armanino is also in the middle of a stock repurchase plan. This buy back is not one of those phony plans announced by a company to goose the stock price after which nothing gets done. Armanino has already bought back over six percent of the outstanding shares in the last year and has authority for further repurchases.

The best thing about Armanino, however, is the fundamental strength of the company. The balance sheet is strong with very little debt. The earnings are also growing; they have risen for many years, even through the recession. Right now, the stock has a price earnings multiple of about 11. For a consumer staples company this is low, although this may be due to the small size of the company. Nevertheless, Armanino has been growing rapidly for the last four years (yes, right through the recession). If the market were fully aware of this company, it would have a multiple substantially higher, perhaps even double the present one.

The likely future for Armanino is that someday one of the larger food companies will buy it for a large premium over the market price. The sale could come in two months, two years or ten years, but I strongly believe it is coming. So Armanino is a well managed, growing company whose stock price is rising. It pays a substantial dividend while you hold it. It has a big payoff coming when it gets taken out by a large food company. In short, it is a strong buy.

DISCLOSURE: I am and have been long Armanino for many years.