Opinions
Andy Nasr
Nestle
NSRGY-OTC
PAST TOP PICK
Oct 19, 2017
Stock price when the opinion was issued
You might be interested:
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 Sept 20/16. Up 11%.) Continues to like this. They generate a pretty decent cash flow, 3%-4% cash flow yield. The balance sheet is relatively strong, however it does continue to own a stake in L’Oreal. If they were to sell that stake, it unlocks a lot of capital which they can use for share buybacks. In the interim, management is focused on slightly improving margins and rationalizing their product line to focus on pet care, water and nutritional products. Derives a significant portion of sales from emerging markets.