Kenvue (KVUE)

Quality, essential brands we love and use daily. Attracted by spinoffs, as they tend to attract interest. Tylenol controversy from Trump pushed price down. Generic brands don't affect many of their products. Attractive multiple compared to PG and CL.

Likes the deal with KMB, which should close sometime next year. Multiple should expand. Not impacted by AI as far as he can tell ;)  Yield is 4.78%.

They fired their CEO after delivering -4% growth vs. expected 2% growth. KVUE is facing activist pressure.

Consumer staples are outperforming in the last few days, and that speaks to the advantage of having a balanced portfolio. Companies like KHC, UL, KVUE, and Nestle. It's not that they won't be affected (their costs would go up), but they're far less cyclical than other businesses. Earnings will be much more stable. Earnings could fall 10%, but not 50%. Dividends will be sustained.

Companies like Unilever and Nestle are huge in NA, but huge globally as well.

An activist investor is inside the company now. Pays a 3.5% dividend. Not followed that much by Wall Street, but offers decent growth.

Spun off from JNJ, but shares are up only 6% this year. The activist investor is too harsh, because the entire health/beauty sector is under pressure.

Consumer health spinoff from J&J. First rate consumer products business. Trading at discount to peers in sector. ~4% dividend attractive. Excellent array of brands in portfolio. Litigation always a concern, but overall not worried for the long term. 

A JNJ spin-off, done with a lot of debt which gives him pause. Their PE is high. Is really concerned is that JNJ also spun off the liability to the talcum powder lawsuits which KVUE now carries.

He owns JNJ. Lots of regard for KVUE, but hasn't initiated a position. Needs a period of seasoning to transition from IPO to reality. He's watching and waiting. Meaningful discount to CHD, but of similar quality.

Consumer products spinoff from Johnson & Johnson.
Would not buy at current share price (19x earnings).
Growth is slow (3-4%).
Sees better opportunities elsewhere.
Assumed product liability on products - very expensive.