Opinions
Mark Grammer
Nestle
NSRGY-OTC
TOP PICK
Mar 23, 2016
Stock price when the opinion was issued
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Trading near a 10-year low. They own 20% of L'Oreal. Trades at 14x PE. Coffee is 25% of their business. They have 30 brands with $1 billion of sales. The new CEO will prune the underperforming assets. Strong growth ahead. The stock is on sale, because growth slowed due to carrying too brands.
(Analysts’ price target is $106.88)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.
(A Top Pick Feb 9/15. Down 1.70%.) One of the most stable companies globally, and is probably better than owning a government bond. The market is a little unhappy with them because they haven’t met their model price for the last couple of years. However, they are still growing their top line at 4%+, a little under the 5% that they promised to do. About $41 out of every $100 comes from emerging markets, which is what you should expect from a global consumer staple. In the last year or 2, China has been a bit of a drag on their growth, but there has been a marked turnaround. Dividend yield of 3.08%.