Wednesday, August 8, 2012

Selling JBSS

John B. Sanfilippo & Son (JBSS) is being rotated out of my recommend list here at around $19 today. It was put in at my Instablog at Seeking Alpha 11/20/09 at $13.90. This nets a +36% result. That's not too bad since the Dow is up just 27% since then ,+ 9% worth of alpha.

But there are some things going awry with the stock. The valuation numbers are no problem - price-to-sales 0.3, price-to-cash flow 9, forward PE 7. The earnings are on an upward trek with that nice 7 PE, but the cash flow from operations is flat over 5 years now and down over 3 years and has gotten erratic (counting TTM), and the 9 ratio is just market average. This is a basic food stock, which will probably be a good area for awhile, but I like to look mainly at cash flow and technicals. On both counts, this looks precarious. The nice climb the stock has been in is starting to gather a lot of volume and the action lately is starting to look like a churn top. It's fractal condition is toast. So I'm kicking it out to make room for some better stuff.

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