The Freedom Foods Group Ltd (ASX: FNP) share price has been amongst the best performers on the All Ordinaries index this morning.
At the time of writing the diversified food company's shares are up almost 4% to $5.34.
Why is the Freedom Foods share price storming higher?
Investors have been fighting to get hold of Freedom Foods' shares this morning after a leading broker initiated coverage on it.
According to a note out of Goldman Sachs, its analysts have initiated coverage on the company's shares with a buy rating and $6.15 price target.
Even after today's solid gain, this price target implies potential upside of over 15% for its shares over the next 12 months.
Why does Goldman like Freedom Foods?
The broker likes Freedom Foods as it believes the company possesses a number of key competitive advantages.
These include its integrated supply; purpose built, latest technology processing facilities; and a proven Nutritional/Dairy production (NPD) track record.
In addition to this, the broker believes Freedom Foods "is well positioned to benefit from macro trends in the Asia Pacific region such as healthier lifestyles, functional foods and rising incomes in emerging markets."
It also sees further growth opportunities for the company in China and Asia. It points out that these markets are demonstrating high demand for plant-based beverages and Freedom Foods is well-positioned with key joint ventures and partnerships already in place.
And finally, it notes that the company is in the final stage of a $400 million capex program that has seen the establishment of state of the art processing facilities in nutritional, dairy and plant-based beverages. It estimates that this will generate $100 million of incremental group EBITDA.
Overall, it expects the above to lead to earnings per share growing by an average of 44% per annum between FY 2018 and FY 2021.
Given these advantages and its potential share price return, the broker decided to initiate coverage with the buy rating.
Freedom Foods isn't the only share that Goldman is positive on. It has also retained its buy rating on the shares of A2 Milk Company Ltd (ASX: A2M) and Coles Group Ltd (ASX: COL) this morning.
