LifeWay Foods

Thanks to Hilary for finding this article
If you can't beat 'em, buy 'em. Actually, come to think of it, even if you can beat them, if the price is right, you might as well buy them anyway.

That seems to be the thinking at Lifeway Foods (Nasdaq: LWAY), the little Illinois maker of a delicious, yoghurt-like beverage known as kefir (pronounced "KEEF-er," like the star of 24,?Kiefer Sutherland). In a replay of a gambit first implemented in 2006, Lifeway announced yesterday that it's buying its biggest rival in the kefir market, Pennsylvania's privately held Fresh Made Foods.

Now at first glance, the deal may not look propitious for Lifeway shareholders. The company will shell out $14.05 million for its new prize, including an up-front payment of $10 million. The problem is, Lifeway doesn't actually have $10 million. In fact, based on its most recent financials, Lifeway taps out at $6.2 million in cash and short-term marketable securities, and carries $3.2 million in long-term debt. Buying Fresh Made will, therefore, put Lifeway even deeper in hock.

But that doesn't mean it's a bad deal. For one thing, Lifeway generates plenty of free cash flow to finance the deal. Secondly, think back to when Lifeway made its last big acquisition: the 2006 purchase of then-archrival Helios. Then, it paid $8 million to acquire $5 million worth of Helios' annual sales, a 1.6 multiple. In contrast, it's paying a 1.4 multiple this time to acquire Fresh Made's $10 million in annual sales.

Let's compare cows to cows
Now I know what you're thinking: Even a 1.4 sales multiple is a pretty steep price to pay, right? I mean, other players that dabble in the dairy space sell for way less than that. Kraft (NYSE: KFT) shares fetch a multiple of just 0.9, and General Mills (NYSE: GIS) commands a multiple of 1.3.

But here's the thing: Neither of these giants is growing anywhere near as fast as the kefir market in general, or Lifeway in particular. Between new sales expansions with retail partners Costco (Nasdaq: COST), Wal-Mart (NYSE: WMT), and Target (NYSE: TGT), Wall Street expects Lifeway to grow its profits at nearly 25% per year over the next five years, meaning Lifeway's growth trajectory has more in common with fast-growing Hansen Natural (Nasdaq: HANS) than with traditional dairy-products rivals.

Foolish takeaway
Which brings me to my final point. Hansen shares boast a 3.2 sales multiple for their growth prospects. Faster-growing Lifeway sells for a 3.3 sales multiple -- and now it's about to jack up those sales by taking on Fresh Made's revenue.

So what's my take on the deal? Mm, mm, good.

Want to know more about Lifeway or kefir? Read about both in: I Love Lifeway Foods Small Cap, Big Potential Fool on Call: Lifeway's Corporate Cotillion

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Why You Should Sell

Why you should sell
You should always sell when you have a better place to put your money -- and today, a host of superior companies are on sale. The takeaway, then, is to recognize when realization utility may take root, take a sober view of your holdings, and take advantage of this down market to upgrade your portfolio. Ten years from now, you'll be very glad you did.

Immucor Inc. (BLUD): Zacks Rank Buy
Bill Wilton
Friday December 26, 2008, 1:00 am EST

Immucor Inc.
Immucor Inc.(NasdaqGS: BLUD - News) recently reported a company record for net income in a quarter and completed an acquisition. Earnings are showing solid growth for next year and are traded at a fair value.
Company Description
Immucor is an international in vitro diagnostic company dedicated to automating manual processes in the hospital/donor laboratory. They develop, manufacture, and sell products used by hospital blood banks, clinical laboratories, and large blood-donor centers to test, detect, and identify certain properties of human blood prior to patient transfusion.
Immucor's instruments utilize patented solid phase technology reagents to perform ABO grouping tests, RH typing, antibody screening, and platelet cross-matching.
Record First Quarter Results
On Oct 1 Immucor announced one of the best quarters in company history that included revenues of $73.2 million, a 15% year-over-year increase. About 75% of the revenue growth came from the U.S.
Net income for the quarter was $20 million, the highest in company history. The figure translates to earnings of 28 cents per share. Wall Street was expecting 23 cents per share, making it the third consecutive earnings surprise.
Dr. De Chirico, President and CEO said, 'All-time highs were achieved in revenues, and net income for the quarter as our strategies to grow our business and the execution of our plan once again generated outstanding results.'
Growth With Reasonable Valuations
The current consensus for next year, fiscal 2010, is $1.16. The forecast represents a year-over-year increase of 19%. The current long-term growth rate is 20%, which brings the relatively high P/E ratio of 23.4 to a PEG ratio of 1.3.
Acquisition Complete
Immucor completed a previously announced deal to acquire BioArray Sollutions, a molecular diagnostic company specializing in blood transfusions. The cash only deal was valued at $108.2 million.
Shares of BLUD have been bouncing off of support at $22 per share. The level has been tested several times and is holding well.

IMMUCOR

Companies That Could Issue Positive Earnings Surprises
The fiscal second-quarter consensus earnings estimate for Immucor, Inc. (Nasdaq: BLUD - News) has risen by a penny over the past 30 days to 21 cents per share. The most accurate estimate is even more bullish at 24 cents per share. The reagent manufacturer has topped expectations for 3 consecutive quarters by an average margin of 4 cents per share. Immucor is scheduled to report on Wednesday, Jan 7, after the close of trading.