B&G Foods Inc. (NYSE: BGS) should have been covered much more in-depth during the period that the novel coronavirus turned into the COVID-19 pandemic and instant recession. As stocks sold off at the end of February and entered panic mode in March, B&G foods went from $17.50 at the start of 2020 down to a low close of $11.30. That only lasted a day at the extreme lows, but the stock is now up 125% or so since that time.

24/7 Wall St. is reviewing B&G Foods as a candidate that some investors will say is now grossly overvalued, versus another view that B&G still offers an incredible value for the long term. B&G is not without controversy either, evidenced back to its 2016 brief peak above $50.

B&G has flown under the radar as a defensive stock and as a value stock because its market cap currently is only about $1.6 billion. Many investors do not even know the company, but they do know its top brands: Cream of Wheat, Mrs. Dash, Ortega, Green Giant, Regina, Emeril’s, Weber, Polaner, Skinny Girl, New York Flatbreads, SnackWell’s and more.

Despite having plenty of room for growth, B&G Foods has seen a peaking trend in revenues ahead of the hoarding and mass buying around the COVID-19 pandemic. This could even fit within America’s top comfort foods in some ways. Ditto for foods with the longest shelf life.

Sales of $1.66 billion in 2019 compared with $1.70 billion in 2018 and $1.67 billion in 2017. Still, sales were just $1.39 billion back in 2016. The company also has about $2 billion in long-term debt and capital lease obligations.

Investors know that there has been a great amount of consolidation in the food business. Selling prepackaged and prepared foods can be a bit tricky when millennials might be more focused on organic and natural foods. B&G can tap some of that market, and the first quarter of 2021 did see close to 9% total revenue growth from the first quarter of 2019 due to the pandemic buying frenzy witnessed in the stores.

As for B&G’s valuation, even after its shares have more than doubled since March’s lows, the earnings per share of $1.64 in 2019 and normalized earnings expectations of about $2.00 per share in 2020 and 2021 just doesn’t sound crazy for less than a $25 stock. Most investors tend to not think that roughly 12 times earnings is crazy. Overall revenues are projected by Refinitiv to rise over 10% in 2020 but then contract by about 5% in 2021. What if the company manages to parlay its last quarterly report of beating expectations into a trend?

One issue that does cause havoc is tracking the short sellers. On last look, those sellers had amassed a 16.17 million share short interest in B&G Foods. That’s just over 25% of its float. When stocks are heavily shorted, they are often treated differently than companies with only 3% or 4% of their float shorted. That said, the exchange-traded funds and other funds under BlackRock, Vanguard and State Street own more than 30% of the outstanding shares in B&G Foods.

Had this stock had a larger market capitalization, it almost certainly would have been among our 40 stocks thriving during the COVID-19 recession.

The analyst community is not all that active in this stock, perhaps due to its smaller size. Credit Suisse had a $17 target in place from August of last year through the end of April in 2020, but the firm then raised its target to $19 and again to $22 in mid-May, despite the current Neutral rating. Also in mid-May, Piper Sandler upgraded its rating to Overweight from Neutral and raised its target to $28 from $21.

Deciding whether this is cheap based on its multiples or is overbought because its stock has doubled in such a short period is no easy task. Wall Street is mixed for the few analysts covering it, and short sellers are all over it.

This may be one time when long-term investors want to be patient and see if pullbacks bring new opportunities.

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