Sep. 8--After "an extended dark and tumultuous period," American Italian Pasta Co. is back in investors' good graces.

That short summary comes from Jon Braatz with Kansas City Capital Associates. Braatz recently initiated coverage after a lengthy hiatus.

Those dark times don't need to be recounted beyond Braatz's succinct summation that "management was cooking more than just pasta."

He likes the new management; CEO John Kelly joined in November 2007.

Kansas City-based American Italian has a firm grip on the private-label pasta market. It supplies Wal-Mart with most of its pasta, and the retail giant accounted for 22 percent of 2008 revenues, Braatz notes in his Aug. 11 analysis. Sysco is another large customer at 9 percent of American Italian's revenues.

Its branded products are familiar in many markets, but Braatz expects the list will be "whittled down" in the next six to nine months as the company focuses on brands with strong shares in the markets where they compete.

Investors should expect the whittling to have "a negative impact on overall volumes though minimal impact on profitability," Braatz wrote.

Braatz also is comfortable with the company's cash flow and he called "ruinous price wars" unlikely.

Still, Braatz trips over one price, namely the one currently placed on American Italian shares.

"We believe much of this outlook is already being reflected in the stock price," his report said.

American Italian shares closed Friday at $30.98. Markets were closed Monday for Labor Day.

The stock has gained 38.7 percent this year.

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Global markets The MSCI World Index of 23 developed countries advanced 0.9 percent in New York on Monday, while U.S. and Canadian markets were closed for Labor Day holidays. The yen weakened against 13 of the 16 most-traded currencies.

"Financial markets are stabilizing and the global economy is improving, but we remain cautious about the outlook for growth and jobs," the Group of 20 nations said after a weekend meeting in London.

To reach Mark Davis, call 816-234-4372 or send e-mail to mdavis@kcstar.com.

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