Top Picks for 2010: Diamond Foods (DMND)

Harding continues, "The firm processes and markets culinary, snack, and in-shell walnuts, pine nuts, pecans, peanuts, macadamia nuts, hazel nuts, cashews, Brazil nuts, and almonds. It sells snack packages under its Diamond, Emerald, and Pop Secret brand names.

"The company seems to have had no problems with the recession or slow economy. Its sales and earnings remain on a fast growth track.

"In fact, it may well be that the slow economy and high unemployment are a plus for this company, with more people eating at home, watching home movies -- and eating snacks.

"The company's growth is also supported by the growing interest in healthy eating, which includes recommendations from the health care industry to include nuts in our daily menus, and to snack on nuts rather than unhealthy fatty-food items.

"In any event, the trend of Diamond's top and bottom lines are impressive, with gains each of the last four years, in spite of the recession. Value Line estimates earnings in 2010 will be rise another 24% over 2009's earnings.

"Always positioning for continued growth, the company is working on expanding its distribution network of grocery stores, food processing companies, restaurants, bakeries, and food service companies in over 100 countries. Foreign sales currently account for only 20% of total sales.

"Diamond also continues to introduce add new products to its snack lines, like Cocoa Roasted Almonds, and Sea Salt Cashews, which were added recently.

"At the current price the shares are selling at 18 times estimated 2010 earnings, a relatively low P/E ratio for what appears to be a solid, if small, growth company. Our upside target is $41. We suggest a 'mental' protective stop at $25.80."

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