Stocks in the Spotlight

Sunopta Inc. (STKL) - 6.07, up 0.21 - Breakpoint 5.97

Profits to Improve This Year and Next, TTD Targets 8

 September 30, 2010 -  STKL, based in Brampton, Canada, produces organic food and supplements. Annual revenues: $989 million. STKL's stock breaks out from a well-formed 7-week flat base today and makes a new 52-week high. The stock is trading a heavy 688,982 shares, triple its normal daily volume of 197,000 shares. The stock is a low-priced speculative issue, but one with upside prospects.

  TTD highlighted STKL at our midsession show on the Web today.

  A look at STKL's 10-minute chart shows the stock knifing through its breakpoint in the morning with strong volume.

  Afterwards the stock, drifted back to the breakpoint line but then bounced up to hold its breakout.

  STKL is a turnaround stock with prospects for improved earnings this year and next. It has 65.2 million shares outstanding.

  TTD's clip of the tape shows the recent big block trades.

  One can see today two key bullish block trades. The first came in the morning on 25,000 shares at a price of $6. A short while afterwards another block of 49,653 crossed at $6.

  That showed heavy institutional buying and is very bullish.

  STKL has three basic operations:  SunOpta Foods, Opta Minerals Inc. and SunOpta BioProcess Inc.

  SunOpta Foods operates in the natural, organic and specialty foods and natural health product sectors.

  It has five operating groups. They are grains and foods, ingredients, fruit, International Sourcing and trading and distribution.

 .Opta Minerals sells silica-free loose abrasives and other specialty industrial minerals to the foundry, steel, roofing shingle and marine/bridge cleaning industries.

 Finally, the firm's Opta BioProcess operates facilities in Ontario and pilot plant facilities in Waterdown, Ontario. In September 2010, the company sold SunOpta BioProcess Inc. to Mascoma Corporation.

  STKL's 12-month performance chart shows the stock appreciating 44% versus a 10% gain for the S&P 500 index.

  STKL's long-term chart shows the stock with a sensational run up from 2 back in 2001 to a peak of 15 in 2007. The stock then got grinded down in the bear market falling to as low as 79 cents a share. Wow! It has since begun to rally back.   

  STKL's daily chart shows the stock rallying from 4 to 6 and then basing. The base is well formed showing a good contraction in volume in the late stages.

  The breakout is ideal coming with expanding volume and a widening of the spread (range from high to low).

  The stock's TTD momentum indicator (top of chart) is modestly bullish.

  The accumulation - distribution line (bottom of chart) is in a solid up trend. That shows good buying over the past several months supporting the rise in the price of the stock.

  This year, analysts forecast a 71% jump in earnings to 33 cents a share from 19 cents a share a year ago. The stock sells with a price-earnings ratio of 18.

  Next year, analysts look for a 27% gain in net to 41 cents a share from the anticipated 33 cents a share this year. So, the stock sells with a low valuation.

  Net for the upcoming third quarter should come in at 7 cents a share compared with a loss of 7 cents a year ago. The highest estimate on the Street is at 9 cents a share. TTD sees good chances for an upside surprise. The past three quarters, STKL has topped the consensus estimate by 2 to 6 cents a share.

  The company has had problems with the SEC about accounting. The SEC has ordered the firm and its CEO to desist from the accounting procedure it is using at a unit. TTD sees this problem as potentially resolved. However, it does still present some risk. So, one needs to be careful with this speculative stock.

  Strategy Opinion: TTD is targeting STKL for a move to 8. A protective stop can be placed near 5.50. TTD rates STKL an average intermediate-term play based on its earnings projections.

  Sponsorship: Good. A key recent buyer was Prudential Jennison Small Company Fund which purchased 93,253 shares. The 3-star rated fund is the largest fundholder with a 1.6% stake. The largest buyer recently was 3-star rated Allianz  RCM Wellness Fund which purchased 116,700 shares. STKL has 65.2 million shares outstanding.

  Insider Activity: Slightly Bullish. Insiders were light buyers recently. The latest buying was at $5.76. Nine analysts follow the stock, 7 have a buy, up from 6 three months ago.

Stock Performance Chart with Quarterly Earnings Markers.

Copyright - Ticker Tape Digest - 2010