Landec: Keeping Produce And Skin Lotion Fresher

By Gene G. Marcial

Investors Are Excited
Little-known Landec (LNDC ) has small-cap investors excited. The stock is up -- from 3.20 in August to 8.25 by Mar. 10. Its patented technology, Intelimer polymer, is used in packaging with breathable membranes to give produce extended shelf life. Landec has licensed the Dole brand for its packaging. Landec is testing it on bananas -- and should launch banana packaging by early 2005, says Anton Brenner of Roth Capital Partners, who rates Landec a strong buy.

Adding to the stock's allure is a deal with French cosmetic king L'Oréal (LORLY ). Landec will supply L'Oréal with Intelimer for use in cosmetics. It's now used by L'Oreal for a fast-absorbing skin lotion in Asia.

While heavy sales to L'Oréal aren't expected until 2006, "long-term benefits could be huge," says Corey Baldwin of Red-Chip Research, but he declined to say how much L'Oréal may use Intelimer for lipstick and hair spray. For fiscal 2005, Baldwin expects earnings to jump to 30 cents a share on sales of $204 million, up from 7 cents on $178 million in 2004 ending May 31.

Note: Unless otherwise noted, neither the sources cited in Inside Wall Street nor their firms hold positions in the stocks under discussion. Similarly, they have no investment banking or other financial relationships with them.

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