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Earlier today, le Monsieur mentioned that he would he would soon be turning his baleful eye — Barad-dûr-style –upon some key food and bevvy stocks that he thought might survive the upcoming economic apocalypse. I thought that somewhat coincidental given a recent visit I’d made to a very specialized niche food business in lovely Colombus, Ohio.
Granted, for large scale exposure, I’ve been buying the Dutch giant Unlilever (UL), mostly for its broad (if bland) array of well known consumer products like Hellman’s Mayonnaise, Knorr Soups, Ben & Jerry’s ice cream, Lipton teas… and even Slim-Fast for phat phucks who might overindulge. I also really like their dividend in this market — almost 4% as of today’s close, and 60 basis points higher than American rival Proctor & Gamble.
The large behemoth aside, the smaller niche food producer I really like is Lancaster Colony (LANC). These guys have done it right and I guess I have to ascribe it to management. About ten to fifteen years ago, they got knee deep in the “glass & candle trade” that was all the rage at the time, thanks to fake Pop Americana crap like “Yankee Candle Company.” When that business went south after formally enjoying ridiculous margins for years, it crushed the stock over a two year period (1998-2000). But I have to hand it to LANC‘s management — they got back into the food business in a big way, and now own some of America’s most iconic niche brands, including Sister Schubert dinner rolls and Marzetti salad dressing and sauces, Texas Toast under the “N.Y.” brand. This weekly chart shows how it’s been very strong on a relative strength basis, and how close also we are to a break out:
LANC is also another solid dividend play, with continuous dividends paid or increased since the mid-60’s. Keep an eye on the $64 mark… if we break from there, it’s off to the races for LANC. And well deserved. It’s just a nicely run “under the radar screen” play that will continue to pick up niche brands where they will hold dominant market share. Dominant market share means pricing power and steady growth. What more could a citizen ask for in these uncertain times? Besides, if things get really bad, we’ll all be eating their tasty croutons (yes, they’ve dominant share in that market too).
Bon appetit!
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Looked at Lanc but passed. No growth
Sure, it may look like Lancaster Colony brands are favorites of a generation approaching the rapid die-off phase, but you are missing the hidden beauty of the play.
We all know that the old folks will soon have to start eating cat food.
If you own a cat, you probably are aware that a can of cat food, made from all the parts of a tuna that humans find inedible, costs twice as much as a can of edible tuna.
One look at the price stickers in the cat food section will send them flying back to the Lancaster Colony brands in a panic.
The 47.5+ers won’t dare venture away from LC brands again, and the company will be able to jack up prices to within 15-20% of the cost of an equivalent meal in the pet food aisle.
A cat lover, too?
Hmmmmm….
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And btw — that Sister Schubert stuff is huge in the South. I’d never heard of it until my wife started bringing it home. And if my five year old’s proclivities are any signal, their consumer base won’t be approaching die off any time soon.
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Good to know. I never heard of that brand. Thanks
Gluten free food sector is experiencing nice growth coupled with an urge to merge.
HAIN, MKC and a much smaller, less liquid competitor which I’m looking at now.
You are spot on. They talked about the gluten free growth at the meeting.
Those smaller guys are also trade bait, a la the junior miners….
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@ Fly — I look at these food co. buys as defensive. You buy growth in a growth market. This is a survival market, and I’ll take the guy who’s increased his dividend every year for almost 50 years over the next CROCS.
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UL is also partnered with SZYM to develop and distribute oil and other petroleum / consumable products derived from algae. This could take off, no GMCR. http://finance.yahoo.com/news/Solazyme-and-Unilever-Sign-bw-2493975362.html?x=0&.v=1
HON partnered with TSN & SYNM to produce biofuel for F-16’s etal then license technology to VLO and DAR to refine it.
here’s a link:
http://www.bloomberg.com/news/2011-10-18/animal-fat-replaces-crude-oil-in-f16s-as-biofuels-head-to-war-commodities.html?cmpid=yhoo
Wasn’t there a Hawaiin company that did something similar a couple of years back? I seem to recall this technology…
Interesting to see SZYM’s top officer list… a little bit unnerving that they could all post on iBankcoin.com without any fear of age banning…
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http://www.hawaiisenergyfuture.com/articles/Biofuels.html#BiodieselfromAlgae
That looks like an Agenda 21 activity to me. Agenda 21 is everywhere.
Nah … this is a national security issue as a result of the Arab Oil Embargo of the 70’s. After closing the gov’t funded Synthetic Fuels Corp in the 80’s as oil prices came back to Earth the DOD went to private industry to replace fossil fuels in case of another embargo.
Mr. Tint, your take on the metals ? adding/holding/sellin ?
thanks
so sorry, learning to type on iPad, meant to type mr. Gint
I am still holding, but my hand is very loose and I am only at about a 40% position. No AGQ, no double anything right now.
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The egregious metal losses in the miners finally got the better of me yesterday. I had 20% of my IRA in the precious and released over 50% of that into the abyss. You may give thanks as I have no doubt finally given the PM market a reason to ascend into unfathomable levels with my capitulation.
I believe that at some point the miners will be valued appropriately and when that happens I will be happy to purchase (more) SLW and RGLD along with ETFs. I won’t be so quick to buy individual miners, nor will I hold as an “investment”. That was a major mistake.
However, I am happy with my reasoned and deliberate purchases of dividend paying stocks. Buying small amounts as they decline. Those that have paid divvies for years are those that I have interest in. Old granny stocks like JnJ, ADP, XOM, BMY and even MSFT among others. All still with AAA bond ratings BTW. Cash heavy. Watching UL at 4% yield to add.
That’s how I am playing this game.
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I am warming to Newt.
I still like Cain but I fear he is just a flavor of the month like Perry and Bachmann before him. He just can’t seem to get traction in the debates.
Newt will be next months flavor. The difference is that when he becomes a debate focus he is going to thrash the competition.
It could get interesting.
Newt has too much baggage. I’m still a Cain fan until I see better. Perry has just not gotten any better, Santorum is a one trick pony (though I like his trick and respect his stance), Huntsman is Joe Leiberman, at best, Ron Paul is your crazy uncle, electorally, even though he’s got some nice plans, Michele Bachmann needs to loosen up about three turns, and Romney will not spit the bit on Romneycare.
That leaves the Herminator, who almost seems a calm spot in the storm compared to all that other stuff.
He needs to get an organization in place, though, and soon. He’s very popular in the South… he should start there.
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jake,on my observations of the Lipton/knorr and a few others have found,and quick they did,was to jump on “the dollar factor” nestle, hershey and so many other small american brands,tyson even,was they are seeking refuge through outlets as dollar tree. for the past 2 years these brands,and the ones you mentioned have really been the foundation of dltr success. they are setting competition of these same goods up against the regular grocery store chains.so now the grocery store chains have picked up on doing the same with these very products as leaders to shoppers,while they are the price grabbers at the dollar out lets.ul, you can get that at dltr.this is why these very companies are doing well.they get to ramp up production and sales,everything,uno dolar,and it’s working well.
BGS is turning up at all the discounters as well and a nice divy …
sorry,meant loss leaders to grocery stores
I’m afraid I didn’t quite get you on that last.
Was your point that UL sales will increase thanks to their brands being fronted as entry vehicles for impulse buys?
I think one of UL’s greatest assets(and PG’s to be fair) is its long established “real estate” position on grocery chains’ shelves.
This also helps LANC in the areas in which it’s dominant, as sometimes they are the ONLY choice for certain niche consumables, like the deadly, but addictive “Texas Toast.”
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no sir,what i’m saying is,that these companies are selling way more product,due to the “dollar” craze.i started tracking dltr over 2 years ago. the lady started going there. she took me in there,you couldnt get me out.every major american company,and other major companies,have found, that in this particular dollar store,that its boom for them. youd never want to pay grocery store prices for,lets say, reynolds wrap. what other stores use,as a loss leader.is dltr regular price.
All of you who vote Democrat can help explain this one. It’s not like this guy is some nutball back bencher like that fruitcake they just dispatched down in Orlando… He’s the *&#!! Leader of the U.S. Senate!
“Clue-tarded” takes on a new dictionary illustration.
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He’s a sneaky one…He wants more money to go to teachers, firefighters, etc so there will be more union dues being paid, whch get turned right around and deposited into the re-election campaign coffers.
Yep. This has been the cycle in place since public service unions became the Democrat Money Laundry some 4 decades ago.
I’ve just never seen a Dem Leader stupid enough to draw such blatent attention to it!
Here’s what’s gonna eventually kill the Dems… their MSM propaganda screen is breaking down due to the disintermediation of news distribution (mostly thanks to the internet, but also cable, radio, etc.), and that has left them exceedingly lazy in crafting their message.
Moreover, because we are deep into the second decade of the Information Age, their policy of “fooling a lot of the people for most of the time” is becoming increasingly less tenable.
Truth will out, as Billy Shakes once said, given an informed electorate.
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Is that a serious request for an explanation?
You mean an explanation of Reid’s bizarre announcement about public sector jobs being the important thing to save right now and the private sector being “fine?”
Of course!
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http://www.nytimes.com/2011/10/21/us/politics/marco-rubio-denies-claim-he-exaggerated-his-biography.html
Another liar ….
LOL. That doesn’t even come up to a pimple on an ant’s house in Democrat circles.
I can certainly see why the MSM would be “vetting” someone who’s not even running for POTUS since they did such an excellent job of researching 0Bama’s shady past.
I mean he is a Republican, after all… sakes alive.
😉
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Jake, how about revisiting precious metals? You did so well with them.
Geez, I do one non-PM post and all of a sudden I’ve got to “re-visit” them?
There’s not much to say right now about PM’s… I’m at about 40% in positions in SLW, AG, EXK, GDX, GDXJ and RGLD. Less so in ANV and IAG.
As mentioned in the PPT today, I may take some AGQ for a trade at $49, with a stop below $48.
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Lol, sorry to pile on but you do still hold at least some of the other PM companies too right? Like XG, MVG, AUQ….etc
I got rid of a most of the smaller guys in favor of SIL, GDX, GDXJ ETF’s, just for simplicity sake.
I do, however, hold those names in extremely limited supply to negate the “Rule of Jake,” which would have them immediately purchased by ABX en masse the minute I sold them entirely.
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To the consternation of the Dem Plantation Owners….
Herminator extends lead in Iowa polls…
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http://www.myfoxdetroit.com/dpp/news/the_edge/sidewalks-to-nowhere%3A-detroit%27s-brand-new-ramps-in-abandoned-neighborhoods
I”ve been watching SKF fall close to the 200 day…Is this still a bear market rally as far as you are concerned?
Yep.
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