Description

PLB is the nation's leading producer of pasta. They have 3 (soon to be 4)
vertically integrated production and distribution facilities. PLB is the
primary supplier to Sam's Wholesale Club, and has large contracts with
Sysco, Best Foods (Muellers brand), and private labels to WalMart, K-mart,
A&P, Publix, Albertsons, American Stores, Winn-Dixie, Krogers, and Ahold.
Additionally, they sell to industrial users and repackagers such as
Pillsbury, General Mills, and Kraft. The PLB private label is Pasta
LaBella, which is where the ticker PLB derives from.

Sales of Pasta LaBella (high margins) is flourishing. 4 new accounts are
likely to be added when the company reports in late October. Gross and
operating margins are improving. PLB expects to lower its tax rate to
about 35.5%. PLB is repurchasing its stock (950K shares already bought and
an additional 500K to be bought). A new pasta plant has been completed (in
Italy), under budget and 2 to 8 months early. This will let PLB compete
very effectively in the higher margin imported pasta market. PLB expects
the new plant to add from 13 to 16 cents per share to earnings (or $40M to
$50M) by the end of year 2002. Durham wheat prices have declined and the
company has passed the savings on to its customers, helping to build a
loyal customer base.

Numbers - Current P/E (L4Qs): 11.6; GPE (est): 1.7; PEG (est): 0.6
Revenues Growth Rate (est): 15%; Earnings Growth Rate (est): 20%
Insiders own 8.7% of outstanding; Institutions own 85.4%
Analyst Coverage: 5 analysts (2 Strong Buy, 2 Buy, 1 Hold)
Projected 3-5 Year Share Price Range: $32 to $76

Risks: Pasta demand may be declining. Improving sales of low margin
Mueller's brand pasta may squeeze margins. The share price has declined 45%
over the past few months, and there may be some institutional tax selling
in the near future. PLB trades on the NYSE, so it is invisible to traders
using NASDAQ Level II software. The company needs PR to become better
known.

Catalyst

Since there has been no negative guidance by the company, and given the
early completion of the new factory in Italy, I hope for a possible
positive earnings surprise for this quarter.

PLB has been a public company only since 1997. It is currently only a 200
pound gorilla in its niche market. By 2003 to 2005 PLB may be an 600 pound
gorilla. The opportunities are presently there.