The Freedom Foods Group Ltd (ASX: FNP) share price is up 43% since the company reported a stellar 2019 financial year earnings report last week, opening at $5.83 this morning and currently trading for $5.78 – a significant improvement on the $4.03 share price the company was trading at just 8 days ago. Freedom Foods is now at its highest level since October last year, and if current trends continue, it might be only up from here. So is Freedom Foods a solid long-term buy? Lets have a look.
Who is Freedom Foods?
You could say it's the original gluten-free health food company – as Freedom states on its website, it "started making gluten-free foods in 1990, before gluten-free was even a thing."
The company manufactures and markets a range of premium nut-free, gluten-free and GMO-free cereals, milks (both dairy and plant-based) and snacks through a portfolio of brands that include Arnold's Farm, Messy Monkey's, Heritage Mill, Australia's Own and Freedom Classic – most of which you can find at your local Coles Group Ltd (ASX: COL) or Woolworths Group Ltd (ASX: WOW) supermarkets.
Freedom Foods prides itself on having factories and manufacturing facilities completely free of nuts, gluten and allergens and rigorously tests its products to ensure no contamination has occurred.
What's behind the share price rises?
Recently, it has been the company's 2019 financial year results driving all the interest in Freedom shares. The company surprised the market with a 79% increase in sales to $476.2 million for FY19, on top of an operating net profit bump of 40% to $21.9 million. Freedom also announced a final dividend of 3.25 cents per share (up from 2.75 cents last year).
The key standout performers were the Dairy & Nutritional Ingredients and the Plant-Based Beverages segments, which booked sales increases of 79% and 35%, respectively.
Much like Bubs Australia Ltd (ASX: BUB) and the A2 Milk Company Ltd (ASX: A2M), Freedom is finding strong demand for its premium products from China and South-East Asia. Sales to China rose by 37% and SE Asia by 178%. I suspect these numbers are the real driver of the increased attention Freedom shares have been attracting over the past week. If the company can solidify a presence in these markets, it will bode very well for its long-term growth.
Foolish takeaway
I like Freedom Foods as a company and think it has a strong brand portfolio in both Australia and now China and SE Asia that it can build on. I think this would be a great company to buy and hold for the long-term, as demand for healthy quality foods isn't going anywhere (in my opinion, anyway). Today's prices are a little expensive for my liking, however, and I'll be waiting for a cheaper entry level.
