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Most of you have heard the adage "Sell in May and Walk Away" or of the "June Swoon." These refer to a traditional period of underperformance during the summer months from May to October. However, a recent note by Standard and Poor's had something interesting to say.

S&P TRENDS & IDEAS

Sectors: Selling in May Isn't Necessarily the Best Play 05/09/2012

• History shows May frequently kicks off a six-month period of relative underperformance for the stock market; hence the adage "Sell in May and Go Away." But investors may want to consider a few things before packing up their portfolios and taking a summer vacation from the market.

• Research by S&P Capital IQ shows an investor would have added an average 400 basis points per year of return since 1990 by rotating into the defensive consumer staples and health care sectors, rather than moving into cash. Remember, of course, that past performance is no guarantee of future results.

Briefly it said that yes, this period is one of low performance traditionally; however, that they had concluded that had an investor rotated money into safe areas like Consumer Staples and Health Care over cash, he would have added an average of 4% a year over cash since 1990. Four percent isn't anything to sneeze at!

I actually had come to the conclusion to play a little defense myself, seeing a value buying opportunity in a well known food producer: Kellogg Co. (NYSE:K). Everyone knows Big K, they make Keebler, Eggos, Pop Tarts, and all manner of cereal. Trust me, you use their products.

I have been recommending them to people at the near $50 level for some time. Kellogg's recently reported earnings, and lowered guidance for the year. The stock took a nose dive, dropping from $54 to that $50 level in a few sessions, putting them down 10% over the last year.

(click to enlarge)

For quite a few reasons, I went ahead and moved into it on May 1 at $50 even. Of course, I am quite familiar with the summer swoons, and was looking for something safe and defensive. For another thing, $50 and slightly lower seems to be a point where Kellogg's prompts buying interest, a level of "support" in technical terms. It also pays a nice dividend of around 3.4%, and the reduced guidance seemed to get factored in to the stock price quickly.

However, I believe there's more to this investment than a sector rotation. I think there is a great value investment here, as I have been watching the food producer from Battle Creek with interest for some time. Let me fill you in on what is happening.

Over the last few years, Big K has been beset with a number of strange problems such as national shortages of Eggos, stinky plastic bags, and more. Turns out Kellogg's, in their zeal to save money during the recession, instituted a program called "K-lean", slashing costs to the bone. Guess what? They cut too far and fired too many, causing all manner of problems within their supply chain. And now they have to rehire, retrain and rebuild and are being forced to spend millions to set things straight, dragging down their earnings.

Big mistake, right? Yep. However, this is key: management actually gets that they screwed up. This is critical to me in value investing, management must understand and be taking effective steps to solve their problems. For example, the most popular article I have written on Seeking Alpha had to do with Intel (NASDAQ:INTC). Intel was languishing in the sub $20 range at the time due to concerns that the mammoth chip manufacturer was a dinosaur stuck making components for declining stodgy desktop computers. I recommended people buy Intel because while, yes, there were serious concerns about ever breaking into mobile, management finally understood that they must get into mobile and were taking irrefutable steps to break into that coveted space. And now, here stand Intel with a 40% gain since then.

Additionally, Kellogg's management seems to be making other smart moves. Proctor and Gamble (NYSE:PG), in its ongoing effort to drive reduced earnings (the Folgers sale was incredibly bone headed), wanted to sell Pringles, the well known premium potato chip brand. Big K has agreed to buy it, snapping it away from troubled Diamond Foods (NASDAQ:DMND). I think it's a good fit; it's more snacks, which Kellogg's does well, and a chance to gain international exposure.

Speaking of international sales, that's another reason to get excited. While one of the main drags on earnings causing the last sell-off was European weakness, K has some great emerging market sales growth. From their last earnings call, you'll find that their Latin American sales grew 7%, and Asia grew 2% despite a lag from Australia. We all like emerging markets, right? By nearly all accounts, that is where the growth is coming over the next decades. I like to get my emerging exposure from established companies, and stay away from businesses based in those countries. Kellogg's fits that perfectly.

Yet another reason I like Kellogg's (remember I said there were many!) is their move into natural and specialty foods. Kashi is a very well respected natural brand that not many realize Kellogg's owns, and K also owns vegetarian-beloved Morningstar Farms. These type of foods allow not only higher pricing, but greater pricing power as health conscious consumers, like myself, are willing to pay more to eat better. And K is experiencing good growth in both.

Last but not least, I enjoy stock charts. They can prove very useful when you can spot a recognized pattern. When you look at the chart above, it's quite like a ladder down. That's a weird chart -- you'll see a series of drops off followed by rises. You can generally buy the dips, and make an effective trade. And although it is considered a bearish pattern, I almost always see it as an eventual reversal, because it shows there is heavy buying interest from investors when there is a lack of bad news.

There are a lot of potential reasons to like mega food producer Kellogg's right now, not the least of which is its defensive nature. Since I bought it just a couple weeks ago, it's up 2% while the rest of the market is down about 3%. However, even if there is no summer swoon this year, K is a great value investment right now, featuring a good dividend, emerging market growth, natural foods growth, addition of a powerful new brand, and a likely turn around story. There are near term challenges to be sure in Europe's recession, and much needed capex spending to rebuild, but when those sort out, Kellogg's could stock price could really improve and with little risk.

Source: Sell In May, But Buy Kellogg's

Additional disclosure: I also occasionally enjoy ELFudge cookies, yummy!