Celebrate Independence Day with these 4 food companies at fair value
- The NRF predicts that U.S. consumers will spend a total of $ 7.52 billion to celebrate Independence Day.
- Consumer packaged goods companies stand to benefit the most from the National Day.
As more people get vaccinated across the country and restrictions on large gatherings are lifted, consumers are eager to cook and watch fireworks to celebrate Independence Day.
Of the total of $ 7.52 billion spent to commemorate the 4e In July, the National Retail Federation found that most of that money would go towards food for backyard barbecues. Planned spending per person is expected to average $ 80.54 for food items.
As a result, investors may be interested in consumer packaged food companies that are fairly valued based on the GF value line.
Using the GuruFocus fair value line, a unique method of estimating the intrinsic value of a stock, investors can find potential value opportunities. Based on Peter Lynch’s popular value line, which compares a stock’s current price to the value of its earnings per share if it traded at a price-earnings ratio of 15, the GF value line takes into account more as the price to determine the value. It also takes into account a company’s historical price-earnings, price-to-pound, price-to-sell and free cash flow ratios of a company, an adjustment factor based on past returns and growth as well as future estimates of the performance of the company. the company.
Using the GF value line for Monster Beverage Corp. (MNST, Financial) as an example, we can see that the stock is considered to be just valuated. The stock price is represented by the blue line, while the solid black line shows past intrinsic values calculated by the GF value line. The dotted portion of the black line illustrates estimates of future intrinsic value. The red and green bands delimit overvaluation and undervaluation respectively, with darker shades indicating larger deviations from intrinsic valuation.
The GuruFocus All-in-one sifter, a Premium feature, found some fairly well-liked companies in the U.S. consumer defensive space that had predictability ranks of at least two out of five stars, including PepsiCo Inc. (DYNAMISM, Financial), General Mills Inc. (GIS, Financial), Tyson Foods Inc. (TSN, Financial) and McCormick & Co. Inc. (MKC, Financial).
PepsiCo (DYNAMISM, Financial), which produces a variety of soft drinks and popular snacks like Lays, Doritos and Tostitos chips, has a market capitalization of $ 206.73 billion; its shares were trading at around $ 149.39 on Friday with a price-to-earnings ratio of 27.71, a price-to-book ratio of 14.82 and a price-to-sell ratio of 2.91.
The GF value line suggests that the stock is currently valued at fair value.
The valuation rank of 3 in 10, however, leans more toward overvaluation as the stock price and price-to-sell ratio both approach 10-year highs.
The financial strength of the New York-based company Purchase has been rated 5 out of 10 by GuruFocus. In addition to adequate interest coverage, PepsiCo is backed by a high Altman Z-Score of 3.72, indicating that it is in good standing even as assets accumulate at a faster rate as income grows. The return on invested capital exceeds the weighted average cost of capital, which implies that the company is able to create value while growing.
The company’s profitability was rated 8 out of 10. Even though the operating margin is declining, the returns on equity, assets and capital outperform the majority of the competition. PepsiCo also has a moderate Piotroski F-Score of 5, which means trading conditions are stable and consistent profit and revenue growth has contributed to a three-star predictability ranking. According to GuruFocus, companies with this rank are earning an average of 8.2% per year over a 10-year period.
Among the gurus invested in PepsiCo, Pioneering investments (Trades, Wallet) held the largest stake with 0.47% of the outstanding shares. Capital of Diamond Hill (Trades, Wallet), Yacktman Asset Management (Trades, Wallet) and Ray dalio (Trades, Wallet) also have important issues.
Known for breakfast foods like Cheerios cereal and a variety of frozen pastries, pastas, pizza and ice cream, General Mills has a market cap of $ 36.72 billion; its shares closed at $ 60.48 on Friday with a price-to-earnings ratio of 16.02, a price-to-book ratio of 3.87 and a price-to-sell ratio of 2.08.
According to the GF Value Line, the stock is currently valued at its fair value.
The valuation ranking of 6 out of 10 does support the undervaluation, however, even as the stock price and price ratios approach multi-year highs.
The company, headquartered in Minneapolis, has a GuruFocus financial strength rating of 4 out of 10. Although General Mills has sufficient interest coverage, the Piotroski F-Score of 2.56 indicates that it is experiencing some. financial pressure. ROIC also eclipses WACC, indicating good value creation.
General Mills’ profitability fared better with a score of 7 out of 10, driven by expanding operating margin, strong returns that outperform the majority of its industry peers, and a high Piotroski F-Score of 8, which means that the trading conditions are sound. Due to consistent profit recording and revenue growth, the company is rated 2.5 stars for predictability. GuruFocus data shows that companies with this rating typically generate an average return of 7.3% per year.
With a 0.49% stake, Jim simons (Trades, Wallet) ‘Renaissance Technologies is General Mills’ largest shareholder guru. Other major investor gurus include Pioneer, Dalio, Mario gabelli (Trades, Wallet), Mayors and power (Trades, Wallet), Joel greenblatt (Trades, Wallet), Ken fisher (Trades, Wallet) and John hussman (Trades, Wallet).
As one of the world’s largest processors and distributors of chicken, beef and pork products, Tyson Foods (TSN, Financial) will benefit from barbecues across the country. With a market cap of $ 26.9 billion, the company’s shares closed at $ 73.75 on Friday with a price-to-earnings ratio of 12.45, a price-to-pound ratio of 1.68 and a price-to-pound ratio. sales of 0.62.
Based on the GF value line, the stock appears to be currently valued at fair value.
The valuation rank of 7 out of 10 leans more toward undervaluation even though the stock price and price-to-sell ratio are both approaching one-year highs.
GuruFocus has rated the financial strength of the Springdale, Ark., Based company at 5 out of 10. Although Tyson has issued around $ 84 million in new long-term debt over the past three years, it is at a manageable level. through adequate interest coverage. The Altman Z-Score of 3.19 also indicates that it is in good standing even though assets are accumulating at a faster rate as income is increasing. ROIC has also historically been higher than WACC, suggesting good value creation.
Tyson’s profitability fared somewhat better, scoring an 8 out of 10. In addition to expanding operating margin, the company is supported by higher returns than its industry peers, a Consistent profit and revenue growth, a high Piotroski F-Score of 8, and a four-star business predictability ranking. GuruFocus claims that companies with this rank return an average of 9.8% per year.
the T Rowe Prize Equity Income Fund (Trades, Wallet) held the largest stake in Tyson with 1.18% of the outstanding shares. Yacktman Asset Management (Trades, Wallet), the firm Simons, PRIMECAP management (Trades, Wallet), pioneer, Tom gayner (Trades, Wallet), Dalio, NWQ managers (Trades, Wallet), Jeremy grantham (Trades, Wallet) and Greenblatt are among its other investor gurus.
Known for its spices, seasonings and barbecue sauces, McCormick has a market cap of $ 23.78 billion; its shares were trading at around $ 89.11 on Friday with a price-to-earnings ratio of 31.41, a price-to-book ratio of 5.71 and a price-to-sell ratio of 4.09.
The GF value line suggests that the action is correctly valued.
The valuation rank of 2 in 10, however, is more conducive to overvaluation even though price-to-book and price-to-sell ratios are at their lowest in a year.
The Baltimore-based company has a GuruFocus financial strength rating of 4 out of 10, thanks to sufficient interest coverage. The Altman Z-Score of 2.63, however, indicates that it is under some pressure as assets accumulate at a faster rate as income grows. The WACC is also eclipsed by the ROIC, suggesting good value creation.
McCormick has a profitability ranking of 8 out of 10, thanks to an expanding operating margin, a high Piotroski F-Score of 7, and solid returns that outperform the majority of its industry peers. Profits and stable revenue growth contributed to a predictability rating of 3.5 stars. According to GuruFocus, companies with this rank return an average of 9.3% per year.
With 0.26% of the shares outstanding, Pioneer is the company’s largest guru shareholder. Other major investor gurus are Simons’ firm, Dalio, Steven cohen (Trades, Wallet), Tom russo (Trades, Wallet), Caxton Associates (Trades, Wallet), Paul Tudor Jones (Trades, Wallet), Gabelli and Mayors and power (Trades, Wallet).
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I / we have no position in any of the mentioned stocks and do not intend to initiate any position within the next 72 hours.