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Company name Omega Protein Corporation
Stock ticker OME
Live stock price [stckqut]OME[/stckqut]
P/E compared to competitors Good

MANAGEMENT EXECUTION

Employee productivity Good
Sales growth Poor
EPS growth Poor
P/E growth Poor
EBIT growth Poor

ANALYSIS

Confident Investor Rating Poor
Target stock price (TWCA growth scenario) $0.65
Target stock price (averages with growth) $1.56
Target stock price (averages with no growth) $2.92
Target stock price (manual assumptions) $19.37

The following company description is from Google Finance: http://www.google.com/finance?q=ome

Omega Protein Corporation is a nutritional ingredient company. The Company is a vertically integrated producer of Omega-3 fish oil and specialty fish meal products. The Company is a producer of protein-rich meal and oil derived from marine sources. The Company’s products are produced from menhaden, and include regular grade and value-added specialty fish meals, crude and refined fish oils and fish solubles. The Company produces and sells a variety of protein and oil products derived from menhaden, a species of wild herring-like fish found along the Gulf of Mexico and Atlantic coasts. It markets several grades of fish meal, as well as fish oil and fish solubles. Its fish meal products are primarily used as a protein ingredient in animal feed for swine, aquaculture and household pets. Its fish solubles are sold primarily to bait manufacturers, aquaculture feed manufacturers and for use as an organic fertilizer. On September 9, 2011, the Company acquired InCon Processing, L.L.C.

 

Confident Investor comments: At this price and at this time, I do not think that a Confident Investor can confidently invest in this stock.

 

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I recently read an article on CNN Money advising investors to invest in consumer product goods (CPG) companies. The logic was that CPG companies, as a group, have several features that should be appealing to investors:

  • Predictability – these companies can predict how much of a product can be sold in the short-term so they control pricing and inventory well.
  • Dependability – these companies are not going to see massive drops in revenue since consumer purchase their products regardless of the economic climate.
  • Pricing power – due to their brand loyalty, these companies can put forward regular price increases with little negative market reaction.
  • Global reach – while most of CPG companies get the bulk of their revenue in the western world, many have made significant investments in emerging markets.

The problem with the article is that the cited companies were fair at best, and some were poor. Instead of the CPG companies in the article, I suggest that you look at good companies such as Coach [stckqut]coh[/stckqut], Decker [stckqut]deck[/stckqut], Boston Beer [stckqut]sam[/stckqut], or Fossil [stckqut]fosl[/stckqut] (all of these companies are currently on my Watch List). If you want to own one or two of the companies in the article, P&G [stckqut]pg[/stckqut] (the stock symbol is not PR as cited in the article) or Unilever [stckqut]ul[/stckqut] are decent candidates – both companies are very well run.

Settling for companies that are familiar to you and you see on the grocery shelves may not be a good investment strategy.  I suggest that you focus your portfolio on companies that have more upside potential but are still very well run.