Stocks Fools Love
February 11, 1998

U.S.A. Floral Products
by Trudy Bowen (TMF Hoyden)

U.S.A. Floral Products <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: ROSI)") else Response.Write("(Nasdaq: ROSI)") end if %>
3500 Whitehaven Pkwy.
Washington, DC 20007
Phone: 202-333-0800
$21 3/4 as of February 9, 1998

Flowers, lovers, and investors have been intertwined for centuries. Ever since the great Tulip Mania of 17th century Holland, Fools and fools with money have smelled the opportunity (sometimes imagined) from sweetly flowering petals. Fast forward 400 years and people are still buying flowers, but usually for more mundane reasons like saying "I love you," or "I'm sorry," or "Please let me watch the game tonight instead of Melrose Place."

For something that serves no real utilitarian purpose, we certainly like giving them and getting them. Sales for cut flowers in the United States are expected to top $8.5 billion this year. A recent study showed that 45 million households buy flowers at least once a month, up from 31 million only a decade ago.

So what's changed in the last ten years to make us all go gaga over geraniums? The experts at "The Floral Index" chalk it up to the entrance of new retailers into the marketplace. For ages if you wanted a bouquet for your sweetie you headed for your local florist. These days you can pop on down to 7-11 or Safeway if you need buds for your best bud. Floral Index's market research has found that sales for cut flowers in supermarkets has increased 183% since 1987.

So where are all of these flowers coming from? And who's making money on our newfound love of pansies and petunias? Meet U.S.A. Floral Products. U.S.A. Floral was founded in April 1997 to pull together a group of regional companies into a national buying and distribution force for floral products. Thanks to its recently announced acquisition of 6 smaller companies a few weeks ago (essentially doubling the size of the company), U.S.A. Floral is now that largest integrated floral distributor in the country. Including sales from these acquisitions, the company's annualized revenues top the $350 million mark.

And guess who they sell to? Yep, places like 7-11 and Safeway.

In a press release after the acquisitions were announced, Chairman, CEO and President Robert J. Poirier said, "We are pleased to be off to a fast start in 1998. This is particularly important in the first half of the year given the seasonality of the floral business, making the first two quarters (when most floral products businesses have historically realized the majority of their profits) the most logical for acquisitions. As we have previously stated, our goal is to grow three ways -- through acquisitions, finding new and creative ways to sell flowers and reducing expenses and maximizing purchasing power to improve corporate earnings."

Maximizing purchasing power is the real beauty of this company's organization. In a traditionally splintered, regionally based industry, U.S.A. Floral's consolidation offers real negotiating clout that few other companies can compete with.

The company went public in October at $13 per share and the stock has almost doubled in price to around $21 1/2 today. Currently there are only 5 analysts following the company, and all have "buy" recommendations.

Unfortunately, while U.S.A. Floral knows roses, it doesn't yet know about websites. If you'd like more information on the company, call its Investor Relations office in Washington DC and ask for an investor's information packet.

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