April 24, 2007: Three somewhat obscure stocks to mull: SRRY,THS and DFR

I received a number of e-mails yesterday applauding me mildly for putting some personal views of myself on a post. Several wanted some additional information of a slightly more personal nature. I attempt to reply to all legitimate e-mails but do not relish being spammed by a few crazies. If you have questions that can be categorized as personal, please drop me a line for a personal response.

T is putting fresh cash from rental cash accounts into a few eclectic stocks and the sale of more Convernium (CHR) shares to bring my holdings to 50% of the original batch I purchased at $4 and pennies/share. I am also selling (25%) some Interline Brands (IBI) at a 1.7% loss-- the company has good management but the share price keeps flat lining. I feel my money is better placed elsewhere.

TREEHOUSE FOODS (THS):

TreeHouse Foods is an excellent roll out story in a highly fragmented private food label business. TreeHouse is managed by highly talented buyers and it is operating in an industry that is ripe for consolidation. TreeHouse expects to make approximately $500m in acquisitions this year, adding profits from day one of each purchase. Their most recent purchase was San Antonio Farms, a Mexican Sauce company with an enviable lineup of products. This compliments their current products including pickles, powdered non-dairy products,soup and infant feeding products. The private label soup and infant feeding products were purchased in 2005 from Del Monte.
Trading at about $32.00/share, this company is an aggressive marketer and maximizer of earnings in a perfect industry for defensive plays. It could well be a $45.00/share stock if earnings continue to grow into 2008.

DEERFIELD TRIARC (DFR):

Deerfield Triarc is an equity company that just acquired Deerfield and Company (DCM), a fixed income asset manager. Trading about $17.00/share, Deerfield Triarc has its assets as follows:
RMBS 36.3%
CDOs 34.5%
CLOs 18.5%
Alternative Assets 5%
Hedge Funds 4%
Managed Accounts 1.8%

Deerfield offers an outstanding yield (9.9%) and has potential for capital appreciation coming from expected increases in the dividend. If the stock makes it to $22.00/share this year which is likely, the total return is excellent, indeed.

SANCON RESOURCES RECOVERY (SRRY):

My first penny stock recommendation. The essentials are this. The company is beginning to click in the Chinese recycling business, especially plastics. It also has a presence in Australia. The company has morphed over several years, stumbling and bumbling. Two important events have occurred beneath the radar to make this company potentially viable. 1. It has focused on recycling and has put resources and a team together to appropriately run the show. Profits are up. Way up in relative terms 2006 to 2005. 2. The new management is Chinese with a tough CFO hired to get things right, giving SRRY a leg up on the Chinese "global warming/save the environment" initiative, which is pathetic in terms of global resolve, but essential to China continuing to develop - recycling old things to make new things. Trading at 50 cents/share, the stock will drift lower as one million shares were placed last week in private at 35 cents. At 40 cents, I am strongly considering buying a chunk of Sancon with fun money.Based upon my research, which has been a challenge on this issue, I believe this company could be a $15.00 stock, or be bought out by a larger trash company seeking expansion into China, which is in its infancy in regards to the trash and recycling business. And don't forget Australia.
www.sanconinc.com
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