Hot Undervalued Companies To Watch In Right Now

The argument I've made for some time with BRF S.A. (Nasdaq: BRFS) is that this company is on a long-term plan to transform itself from a commodity- and export-driven protein company into a global branded food company like Kraft (Nasdaq:KRFT) or Nestle (Nasdaq:NSRGY). With that, I not only expect significant growth, but significant margin and free cash flow expansion over the next decade. BRF S.A. is by no means cheap according to conventional metrics, but the shares are still slightly undervalued on a cash flow basis and offer investors good exposure to emerging market consumer spending growth.

Q2 A Little Light On Sales, But Strong On Margins
BRF S.A. came in just slightly (1%) below average sales growth expectations, with 10% growth for the second quarter. Growth was driven by the company's large export business (up 19%), as domestic sales (up 4%) were weighed down by a weak demand environment across the Brazilian food sector.

With a better mix (more processed foods) and improving export conditions, BRF S.A. saw significantly better margins this quarter. Gross margin improved about three points from the year-ago period, beating the average estimate by almost a point and a half. Operating income jumped 79% on a huge improvement in export margins, while EBITDA rose 49% and the company logged an almost three-point margin improvement.

SEE: A Clear Look At EBITDA

Export Conditions Generally Better
One of the reasons BRF S.A. management wants to increase its exposure to packaged foods is to get off (or at least mitigate) the roller coaster that is the global protein export business. Chicken volumes were down about 2% from last year, pork was down 17%, and beef was down 3%, but pricing was significantly better. With that, export income more than doubled, with margin almost tripling over last year.

As the year goes on, export business ought to improve. Grain price pressures should ease in the second half, and the company is hopeful that it may get clearance to export chicken to Mexico. At the same time, pork exports to Ukraine should return to normal, while the entry of the company into Japan's pork business ought to help margins as this business will likely be centered on premium cuts.

Hot Undervalued Companies To Watch In Right Now: African Copper Corp (ACCS)

African Copper Corporation, formerly New York Tutor Company, incorporated on April 6, 2011, is an exploration-stage company. The Company is engaged in the business of exploration of precious metals with a focus on the exploration and development of copper and other precious metals deposits in northwestern Botswana, Africa. On April 4, 2013 the Company completed the acquisition of the Property from Guerrero Exploration, Inc.

The Company�� mineral interests consist of exploration stage properties referred to as the Property. As of April 4, 2013, the Company had not generated revenues from its operations. The Company plans to conduct exploration activities on its mineral properties, which exploration may include the completion of feasibility studies necessary to evaluate whether a commercial mineable mineral exists on any of its properties.

Hot Undervalued Companies To Watch In Right Now: Farmer Brothers Company(FARM)

Farmer Bros. Co. engages in the manufacture, wholesale, and distribution of coffee, tea, and culinary products. Its product line includes roasted coffee; liquid coffee; and coffee related products, such as coffee filters, sugar and creamers, assorted teas, cappuccino, cocoa, spices, gelatins and puddings, soup, gravy and sauce mixes, pancake and biscuit mixes, and jellies and preserves. The company distributes its products through direct and brokered sales to institutional foodservice establishments, including restaurants, hotels, casinos, hospitals, and foodservice providers, as well as retailers, such as convenience stores, coffee houses, general merchandisers, private label retailers, and grocery stores in the United States. Farmer Bros. Co. was founded in 1912 and is headquartered in Torrance, California.

Hot Canadian Stocks To Invest In Right Now: Global Green Matrix Corp (GGX.V)

Global Green Matrix Corp. engages in the reclamation of industrial polymers worldwide. It also focuses on exploring and pursuing new environmentally sound methods and technologies in recycling and reclamation sectors. The company was formerly known as Poly-Pacific International Inc. and changed its name to Global Green Matrix Corp. in February 2010. Global Green Matrix Corp. was incorporated in 1995 and is based in Gabriola, Canada.