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bear_mkt
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I'm an individual investor and trader. I'm currently retired. My professional work experience has been in commercial real estate, working for a major supermarket company and for an urban development corporation. Bear_Mkt is my pseudonym -- bear seems to be my usual investing view. Don't take... More
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Dollar Crisis
  • Why buy a laggard like Apple (AAPL)? (B&G Foods - BGS)  0 comments
    Nov 1, 2011 1:04 AM | about stocks: AAPL, BGS
    Why buy a laggard like "stingy with dividends" Apple (up only a lukewarm 33% over the last 52 weeks) when you can buy a momentum stock that pays a dividend  like.....B&G Foods (up a smokin' hot 74% over the last 52 weeks)?
     
    Well, now that I've got your attention, BGS is a nice stock to put on your watch list and add on a pullback.  You can feel good about it too because your purchase....benefits orphans.  
     
    BGS is a food company that specializes in acquiring orphan food brands, brand names that are too small for bigger companies to promote. Their brands include Cream of Wheat, Ortega sauces, B&G pickles, B&M baked beans, Vermont Maid syrups, Polaner jellies, Accent etc.
     
    BGS has just announced that they are acquiring several Unilever brands including Mrs. Dash, Sugar Twin and Bakers Joy. (Also, Static Guard, an outlier.)  The conference call is today. They have cash on hand, but the acquisition will be funded with outside financing which has been obtained.  The newly-added brands are described as accretive.
     
    BGS has been shareholder friendly. They just increased their dividend 9.5% for a yield of about 4.3%.
     
    My spin: BGS periodically stumbles, offering buying opportunities, sometimes while integrating acquisitions or because of rising commodity costs.
     
    Minuses: Cramer seems to like them, so there's a Cramer premium in the stock. The PE is high (although cash flow is a better way to look at them.)  Forbes thinks they're overpriced.  (The stocks up 8% since then.) There is always the risk of rising commodity prices.
     
    Pluses: Their brands are niche products and in the scheme of things aren't very expensive, so IMHO switching off to store brands is not a huge issue.  Quality is generally good. (I prefer the Ortega hot sauce after trading down from some expensive specialty brands.)  Management has been shareholder-friendly.
     
    All I can say is: this was a Peter-Lynch-type purchase for me. I came for the pickles, but stayed for the dividends and price appreciation.
     
    Just my opinion.
       
    Themes: food, retail, groceries, grocers, supermarkets Stocks: AAPL, BGS
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