In the time that I’ve been watching newsletter ads, I’ve seen precious few companies that have been “teaser favorites” of multiple newsletters. One of those is the Brazilian poultry and processed foods company. It was teased by Mark Skousen in February, and then by Tom Dyson at Stansberry & Associates in March … and before I started writing in this space, it was touted by the Hidden Gems folks at Motley Fool (they wrote again about it today, albeit briefly, which is what brought this to mind).
I’ve been holding Sadia for about 18 months now, at a split adjusted $9 or so per share, which is part of the reason I am not overwhelmingly enthusiastic about it — like most investors, I suffer from the psychological limitations of my primitive brain, and therefore keep thinking of Sadia with my initial purchase price as a reference point.
Of course, it doesn’t really matter what I paid for the shares — if I ignore that, and look at the growth of Sadia, and their very low valuation on earnings (something around a PE of 10, if you think the last quarter was indicative of the year’s potential), with very strong earnings growth, it’s hard to argue against buying shares here. Add on the possible increased institutional investment in Brazil thanks to the upgrade to S&P, and their relative advantage compared to some other poultry producers because they locate their poultry processing plants just down the road from where the world’s soybeans are grown (though margins will still suffer due to increased input costs), and it looks like all these newsletters are making a pretty good call.
Of course, not everyone agrees — they’ve gotten a downgrade or two this year, and it’s certainly true that the shares have moved up very quickly, which scares other people (not just me). Here are a few more articles if you want some Sadia background:
Forbes: Sadia Feeds a Hungry Brazil
Motley Fool: Best International Stock
My original buy notice, from Seekingalpha in December, 2006
The Sadia teasers I’ve looked at this year