We came across a bullish thesis on Flowers Foods, Inc. (FLO) on Stock Picker's Journey’s Substack by Gregg Jahnke. In this article, we will summarize the bulls’ thesis on FLO. Flower Foods, Inc.'s share was trading at $22.62 as of October 9^th. FLO’s trailing P/E was 37.80 according to Yahoo Finance.

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Flowers Foods, Inc. (FLO) is a prominent player in the U.S. bread industry, boasting a market capitalization of $5 billion and a market share exceeding 20%. With strong positions in the Southeast and Southwest, where its share is over 30%, FLO's notable brands include Wonder, Nature’s Own, and Tasty Cake. The company operates with a strategy focused on steady revenue growth and margin improvement, aiming for EBITDA growth of 4-6% annually while maintaining sales growth of 1-2%. By concentrating on more profitable product lines, such as organic and gluten-free offerings, FLO effectively enhances its earnings potential.

Investing in FLO presents a compelling opportunity for several reasons. The company offers a 4% dividend yield and trades at an attractive 18 times earnings, compared to EVRG, which has a similar yield but trades at 15 times earnings. FLO's management, led by former chairman George Deese and current chairman Ryals McMullian, own significant shares, aligning their interests with those of shareholders and ensuring prudent capital allocation. The market currently undervalues FLO, reflected in just one buy recommendation against six sell/holds. The stability associated with FLO’s product offerings contrasts sharply with the regulatory challenges faced by utility stocks, making it a favorable investment alternative. With a focus on EBITDA growth and a commitment to shareholder value through buybacks and acquisitions, FLO presents an attractive investment thesis rooted in solid fundamentals and a favorable market position.

Flowers Foods, Inc. is also not on our list of the 31 Most Popular Stocks Among Hedge Funds. As per our database, 26 hedge fund portfolios held FLO at the end of the second quarter which was 27 in the previous quarter. While we acknowledge the risk and potential of FLO as an investment, our conviction lies in the belief that some AI stocks hold greater promise for delivering higher returns, and doing so within a shorter timeframe. If you are looking for an AI stock that is more promising than FLO but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.

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Disclosure: None. This article was originally published at Insider Monkey.