Sudden Interest in Bridgford Foods Corp. Makes This Wall Street Wallflower Bloom

Instead of high technology and hyper growth, Bridgford Foods Corp. offers investors canned biscuits and cautious management. Until lately, that generated little but yawns from stock traders.

But now the Anaheim-based manufacturer of frozen bread dough, canned crescent rolls, snack sausages and other convenience-food products is looking like the Orange County Cinderella story of 1987, says analyst Jeffrey Kilpatrick.

Until a few months ago, Chairman H. William Bridgford acknowledges, Bridgford was a perennial Wall Street wallflower.

“For years, the stock never did anything; it just lay there,” said Kilpatrick, president of Newport Securities Corp. in Costa Mesa. “Now, for some reason that nobody can seem to identify, the stock has just gone nuts.”

Bridgford’s common stock, which was $5.875 per share at the end of 1986, hit a record $21 Aug. 12. The stock closed Friday at $17.25 per share in over-the-counter trading.

Although the reason for the soaring prices are unclear, Bridgford’s recent earnings certainly haven’t hurt.

Profits for the six months ended May 1 were $845,803, more than three times the $238,823 earned during the same period a year earlier. Sales for the six months were $28.2 million, compared to $27 million for that period the year before.

But Kilpatrick, who has been tracking Bridgford for about seven years, said increased earnings alone do not explain the run-up.

“They’ve had a nice earnings increase, but it’s nothing that hadn’t been expected,” Kilpatrick said. “It’s not like they’ve invented a new high-tech hot dog or something that’s going to suddenly excite the world.”

Until 1987, he said, Bridgford’s stock was “grossly undervalued.” The shares consistently traded at or below the per-share book value of Bridgford’s assets. The stock now trades at nearly three times book value, which was about $6 per share May 1.

Company Chairman William Bridgford said he had long been frustrated by the relative lack of interest in the stock.

But, like Kilpatrick, he is not certain why it has become such a hot item.

“We’ve received a great number of calls from substantial brokers seeking to locate large quantities of the stock,” Bridgford said. “They have not disclosed who their customers are or the reason for their interest.”

It apparently isn’t a takeover attempt because the Bridgford family owns about 60% of the 1.3 million shares outstanding and, says Bridgford, has no intention of selling.

And while the increase in the stock’s value has dramatically boosted the net worth of family members, Bridgford said management has not tried to stoke investor interest in the company.

“We make very little effort to hype our stock,” he said. “We feel the earnings and the results and the company’s record should stand on their own.”

Bridgford, which was founded in 1932, is one of the more conservatively managed public companies in Orange County, Kilpatrick said.

It has pursued growth at a slow and steady pace, relying on cash flow to finance expansions and avoiding high debt.

The company now operates six food production plants across the country. Its refrigerated, frozen and snack-food products are sold through its own sales force to about 40,000 supermarkets, convenience stores, restaurants and institutions.

At its Anaheim plant, William Bridgford and his brother, Allan L. Bridgford, the company president, sit a few feet apart in a small office in the middle of the production area.

The two brothers oversee operations with their father, founder Hugh H. Bridgford. They draw annual salaries of less than $100,000 each, relatively modest pay for a company with more than $50 million in annual sales.

“It’s a very old-world, family-style sort of business,” Kilpatrick said. “When you walk in there, you sort of step back in time.”

Yet even a plodder can have its day in the sun, and Wall Street’s infatuation with Bridgford shows no sign of abating.

Kilpatrick, who for several years has been urging conservative clients to buy the stock, considers it “fairly valued” at long last and would even consider advising selling should the price top $20 again.

Some shareholders feel otherwise.

“None of my stock is for sale,” said William Bridgford. “None of my brother’s stock and none of the stock owned by other members of my family is for sale either.

“As far as we’re concerned, we’re just doing what we’ve been doing and trying to do more of it.”