- COVID-19 panic knocked SMPL stock down 50% at one point; valuation seems appealing

- SMPL benefits from strong management; healthier snacks trend; potentially strong growth

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- In a more normal post COVID-19 world, SMPL could rise 25%-30%; heavy insider buying seen

Like many small caps, Simply Good Foods (SMPL) saw its stock get whacked in the coronavirus panic in March, down about 50% at one point to $14 from $30 last September.  The market abandoned small caps en masse—normal under stressful times—even companies with strong potential, like SMPL. 

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Once the COVID-19 outbreak subsides, however, SMPL should get back to its normal 20% or so growth. At around $19, I think that’s an attractive entry point long term, as I will explain below. Until COVID-19 hit, and as the February ended fiscal second quarter results indicate, SMPL was meeting its targets and showing promise.  That should resume eventually.

In that quarter, SMPL’s net sales rose a healthy 83.4%, or $103.3 million, to $227.1 million. Net income fell to $10.7 million, or 11 cents per share from $12.7 million or 15 cents per share in the year ago quarter, but most of that was due to acquisition costs, including higher interest expense, of Quest Nutritional, as well as the...
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