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business newsB&G Foods Proves There's Money in Cooking Stock
By
Justin Sharon
Jan 26, 2011 4:55 pm
Shares ended up more than 2% today to take its 12-month increase to better than 54%.
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The company provides pantry loads of processed and packaged foods with a decidedly Latin flavor to a customer base in both North America and Puerto Rico. Its shelf-stable offerings include assorted Mexican fare, refried beans, taco shells, enchilada and chili sauces, pepper products, and olives. The Parsippany, New Jersey outfit also manufactures various seasonings and cooking stocks as well as other basic peasant-type foods such as black strap molasses; the skyrocketing cost of food and its increasing absence from Cairene cupboards threatens to topple the Middle East’s most important domino as we speak.
Today’s good gains come on the back of an Overweight from Neutral boost at Piper Jaffray, whose $16 price objective (from only $11.50 previously) allows for still-ample upside. Piper cited organic growth and acquisitions as two potential share price catalysts. B&G is a good way to play this country’s burgeoning Hispanic demographic, a trend that has been underway for an entire generation now. (America’s salsa-versus-ketchup condiment debate was settled emphatically in favor of the former back when Bush One was president and Christina María Aguilera was still a year away from her first appearance on The Mickey Mouse Club.) A dividend yield presently flirting with 5% is also enough to entice, although with inflation now so obvious even the experts are aware of it, commodity cost pressures are a constant concern.
Please see Food Stocks Aren’t Always Bread and Butter Investments and Uproar Over Food Inflation.
President Obama, a proud product of Chicago, delivered a decidedly business-friendly State of the Union address last night but it didn't exert much positive influence on the Windy City’s own Boeing (BA). Shares ended down about 3%, easily the Dow's biggest drag on a day the index earlier touched 12,000. It follows fourth-quarter earnings and revenue which each imploded 8%, to $1.16 billion or $1.56 per share, and $16.55 billion, respectively.
As the late Leslie Nielsen -- who passed away during the period in question but not before delivering the most memorable line of dialogue ever uttered aboard a Boeing aircraft at cruising altitude -- was once asked, “Surely you can’t be serious?” I’m afraid I am, and as so often happens, investors are attaching even more importance to similarly uninspiring forward guidance. 2011 net income, not helped by ever-escalating pension expenses, is now forecast to be in an EPS range of between $3.80 and $4.00, well below the $4.53 that consensus was calling for. The company’s seven-time delayed 787 Dreamliner has been a well-documented nightmare, but its 747-8 jet is also 18 months behind the eight ball. Add into this mix the anticipated launch of Europe’s Airbus 350-1000 in the next few years and company CEO Jim McNerney doesn’t lack for “development program challenges” as he politely put it this morning. Any sustained increase in oil prices will also negatively impact commercial aircraft demand, although Boeing can call upon a huge order backlog to help it navigate the tough times currently on the horizon.
Also check out The Complete History of Dreamliner’s Stunted Growth, Why Boeing Is a Great Weak Dollar Play, and A Direct Correlation Between UFOs and Shares of Lockheed Martin and Boeing?
Shares in Kleenex maker Kimberly-Clark Corporation (KMB) were sharply higher yesterday on impressive earnings. Using a brand name as a noun is known formally as a "proprietary eponym" although it’s extremely unlikely another iconic American firm that has made a similar contribution to the English language can afford two such $10 words today. Xerox Corporation (XRX) posted solid third-quarter results in the autumn but it had an awfully hard time reproducing the performance this morning.
Shares slumped almost 8%, making it the S&P 500's single worst performer after the Connecticut company reported fourth-quarter earnings of $171 million, or $0.12 on an EPS basis, below year-earlier results of $180 million and $0.20, respectively. It also issued downbeat first-quarter per share projections of between $0.20 and $0.22, a penny below what Wall Street was anticipating. For all of 2011 it now sees adjusted earnings of between $1.05 to $1.10, again disappointing as analysts had pegged the number to be at the upper end of this range.
Adding to the uncertainty, 68-year-old finance head Lawrence Zimmerman, “a very steady hand on the wheel” in the assessment of JMP Securities analyst Douglas Ireland, is to leave next month. Inspired by the successful example of International Business Machines (IBM), whose surging stock has been defying gravity on an almost daily basis lately, Xerox has begun to diversify away from its core business and move into higher margin areas including services. Under the often innovative leadership of Ursula Burns it acquired outsourcing outfit Affiliated Computer Services for $6 billion last year to better bolster the effort. This afternoon’s share price action painfully illustrates however that the makeover remains a work in progress.
Turn to America: Innovate or Die, Rags to Riches CEOs: Ursula Burns, and Shares of Companies Whose CEOs Dine With Obama Outdo S&P 500 for more.
One name not getting a benefit from this afternoon’s modest post-Fed bounce is Luxottica Group SpA (LUX). Shares in the upscale retailer, based in Europe’s catwalk capital of Milan, are sharply lower after being cut to Neutral from Buy at Nomura. The stock hit a 52-week peak only last week, so a bout of profit-taking was perhaps inevitable. On Monday it reported record profits as the rich again remained relatively immune to a still-soft economy. Fourth-quarter sales surged 16% to $1.82 billion.
Sunglass Hut stores were a particular standout and Luxottica was also helped no doubt by the priceless exposure its expensive Oakley eye-ware division received in October after a role in helping Chile’s rescued miners to literally see the light again after a 69-day ordeal. The company, whose brands also include Ray-Ban and Oliver Peoples, is vulnerable to any consumer contraction in North America, where it operates more than 4,700 locations, and sustained weakness in the US dollar will also act as a headwind.
That said, shares, currently trading on about 21.5 times estimated 2011 earnings, are actually at a discount to their historical average. And all those business moguls currently on the ski moguls of Davos surely represent an eye-opening business opportunity.
Read related content at Quick Hits: So Long, Luxury and Hermes Beats Walmart at Own Game.
No positions in stocks mentioned.
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