Alcohol Consumption Rising: 3 Ways To Play The Trend To Your Advantage [View article]
How do you not mention DEO in this? Spirits growing faster than beer and DEO is the biggest in this. The growth isn't in beer and the growth that is in that is in craft beers. The growth of alcoholic consumption is being led by spirits.
thanks for pointing out the basics of the current ratio... ? If you look at that measure in a silo in an analysis, you're wrong. You need to look beyond it. MKC in its history has never carried a high amount of cash on its balance sheet because of the reasons I mentioned before. Why would you want cash sitting doing nothing on a balance sheet in a low interest rate environment? It's not like they have debt due within the year either. Basic common sense
agree with coco here - too expensive given growth. Just check out the PEG and it makes sense. 40-60% market share is what is given. There really isn't a honed in value. It should be about 50%. We do know it controls about 50% of the domestic private labels.
I sold my MKC around $70 a few months ago but coco is right in what he's saying here.
Too rich - all these dividend aristocrats are pretty much selling at a premium. MKC's long-term P/E is only 22x so at +23x you're paying a bit more than fair-value, especially with the lower growth prospects this year. Even if you include Wuhan into the equation, which you should in my opinion, it's still normal growth for MKC of 4-6% sales but lower EPS growth of 7-9%. Great long-term story but still there are better current plays.
As far as the cash question - I love that they don't keep a lot of cash on the books. They reinvest in the company and payout to shareholders. Why keep cash on the books when it does nothing for you? What they will end up doing when debt comes due is roll-it over like what other major companies (ex: GE) did. Why have cash sit there and do nothing for shareholders? That's why aapl just got into trouble (not saying that MKC has even close to that amount of cash but you need to use it for the benefit of shareholders).
Love the stock and the company/business model but buying it here is a little more risk than reward when you look at when you could have bought it in the past. Thanks for the read though
Yea so you're getting similar values - guess we're 2 pretty smart guys. Like I said, I trend on the conservative side and demand a higher required rate of return. Knock on wood, it's worked so far. Plus the long-term range of ERP historically is 6-9%.
I don't like when I get a wide range between my worst case and best case, like I did here, but if it's at $16 and change now and my bottom is $15... I feel comfortable owning it.
Like I said - it's been a while. That's my usual methodology. I may have looked at DF's debt rates seeing it was a part of it and must have similar credit, so I'll agree with you there for sure. Once again, not sure what I did as I don't have the model in front of me. 2.2% for a rate is too low even though its just a credit facility really.
If you go on a bloomberg terminal, you'll see the average expected return on the market is in the high-10% to low 11% over the last decade. The average is roughly 11%, so an ERP of ~9% then. I know of others who use a ERP of 6%. I'd rather be overly conservative and ask for a higher required rate of return. I also know of companies around here that just use strictly that 11% WACC for any and every company for the required rate of return they want. That way, there is no assumption issue and debate about the right and wrong of something.
You have a PT on them? They report on the 9th by the way.
I did this a while ago but usually my methods are the same across the board in terms of what you're asking. CAPM approach with an adjusted beta over a raw beta. Assumed market premium of 11% and risk free of 2%. COD is usually the weighted average coupon rate for me as I believe that best represents it (just my own belief). And I forget what I had for the weights of debt and equity (probably used market value numbers).
To be honest, I think that distribution will be already factored in. The stock will take a hit of a couple percentage points most likely, but to predict that is wrong as the market is irrational. A dip on that is a buying opportunity based on brand value. I have 1/2 my position in on the stock currently and have waited for a strong enough pullback that I haven't seen in the stock. It's just been relatively flat over the past few months. Brand power is key and the trend toward organic is the story behind the stock from a sell side view.
More on Discover Financial (DFS) Q1 earnings: Discover card sales volume +4% Y/Y. 30-day delinquency falls to a record low 1.77%, off 33 bps Y/Y. Net interest margin of 9.39%, up 30 bps Y/Y thanks to lower funding costs. Reserve release of $154M vs. $274M a year ago. Expenses of $75M, up 12% Y/Y due to higher compensation costs. Shares +2.3% premarket. (PR) [View news story]
Diamond In The Rough: Part III - Post Earnings [View article]
Snack space seems to be doing well (look at PEP call). Management is very quiet across the board. Still think there's going to be margin expansion personally as they shift away from nuts and more towards Kettle and Pop Secret. Re-org will hurt EPS a bit short-term, but LT thesis remains in tact for me thus far unless something comes out. Needs to focus on debt reduction or at least getting out of the oaktree debt/preferreds
1) growing internationally 2) potential for margin expansion with input cost decline 3) stealing market share from Red Bull on a unit and now dollar basis 4) it is cheaper per unit than Red Bull and has potential to expand price without much consumer backlash (big difference too) 5) energy drinks as fastest growth in beverage sector (Source: Bloomberg) 6) release of litigation potentially despite recent reports that who would have thought that people with heart issues shouldn't have energy drinks (GASP!) 7) Still could be bought by KO as KO has plenty of opportunity and financing to do so - plus with that recent Q, they could use the growth
Consumer Staples: Like Apple At $700 Or Gold At $1900 [View article]
I think you're right. Totally agree on WAG (and WMT for that matter). Staples are up partly because of the bond market. I like(d) following MKC, HNZ, BGS, GIS, UNFI, PG, WAG, MNST (should be discretionary too), and a few others and I can't justify buying any anymore. The risk is not worth the reward and they are no longer conservative investments. Part of my reason for buying into MNST in the mid-40s was that staples were up at the time 450 bps on the S&P but MNST was down a couple hundred for the entire year on an absolute performance basis. I think you're dead right on this play, being a fellow consumer staple follower myself. Good luck -
Are McCormick's Spicy Multiples Justified? [View article]
Nope - was tempted to buy in but I have my money in other plays. Want back in on MKC in the long-run, but there is a clear bubble in the dividend paying stocks right now (look at the history of any of the big name food manufacturers or even the utility sector at this point). Lots of people looking for yield. through the stock market have bid up these safer plays that have yield to them.
Alcohol Consumption Rising: 3 Ways To Play The Trend To Your Advantage [View article]
McCormick's Good Business Model [View article]
McCormick's Good Business Model [View article]
I sold my MKC around $70 a few months ago but coco is right in what he's saying here.
McCormick's Good Business Model [View article]
As far as the cash question - I love that they don't keep a lot of cash on the books. They reinvest in the company and payout to shareholders. Why keep cash on the books when it does nothing for you? What they will end up doing when debt comes due is roll-it over like what other major companies (ex: GE) did. Why have cash sit there and do nothing for shareholders? That's why aapl just got into trouble (not saying that MKC has even close to that amount of cash but you need to use it for the benefit of shareholders).
Love the stock and the company/business model but buying it here is a little more risk than reward when you look at when you could have bought it in the past. Thanks for the read though
Wall Street Breakfast: Must-Know News [View article]
Riding The 'White Wave' [View article]
I don't like when I get a wide range between my worst case and best case, like I did here, but if it's at $16 and change now and my bottom is $15... I feel comfortable owning it.
Riding The 'White Wave' [View article]
If you go on a bloomberg terminal, you'll see the average expected return on the market is in the high-10% to low 11% over the last decade. The average is roughly 11%, so an ERP of ~9% then. I know of others who use a ERP of 6%. I'd rather be overly conservative and ask for a higher required rate of return. I also know of companies around here that just use strictly that 11% WACC for any and every company for the required rate of return they want. That way, there is no assumption issue and debate about the right and wrong of something.
You have a PT on them? They report on the 9th by the way.
Riding The 'White Wave' [View article]
I did this a while ago but usually my methods are the same across the board in terms of what you're asking. CAPM approach with an adjusted beta over a raw beta. Assumed market premium of 11% and risk free of 2%. COD is usually the weighted average coupon rate for me as I believe that best represents it (just my own belief). And I forget what I had for the weights of debt and equity (probably used market value numbers).
To be honest, I think that distribution will be already factored in. The stock will take a hit of a couple percentage points most likely, but to predict that is wrong as the market is irrational. A dip on that is a buying opportunity based on brand value. I have 1/2 my position in on the stock currently and have waited for a strong enough pullback that I haven't seen in the stock. It's just been relatively flat over the past few months. Brand power is key and the trend toward organic is the story behind the stock from a sell side view.
More on Discover Financial (DFS) Q1 earnings: Discover card sales volume +4% Y/Y. 30-day delinquency falls to a record low 1.77%, off 33 bps Y/Y. Net interest margin of 9.39%, up 30 bps Y/Y thanks to lower funding costs. Reserve release of $154M vs. $274M a year ago. Expenses of $75M, up 12% Y/Y due to higher compensation costs. Shares +2.3% premarket. (PR) [View news story]
Diamond In The Rough: Part III - Post Earnings [View article]
The 'Retire Young' Portfolio [View article]
Consumer Staples: Like Apple At $700 Or Gold At $1900 [View article]
Consumer Staples: Like Apple At $700 Or Gold At $1900 [View article]
Are McCormick's Spicy Multiples Justified? [View article]
Argus raises its rating on General Mills (GIS) to a Buy rating from Hold. Related: (Has the rally in consumer staples stocks run its course?) [View news story]