This Defensive Food Stock Offers a 4% Dividend and Strong Growth Potential
What if you could get 4.2% in dividends year after year with a lower risk investment? This diversified food company has many leading brands and the ability to survive the ups and downs of the market.
Over the past two months, investor preferences have quickly shifted from high-flying momentum growth stocks to more defensive companies with stable revenues that have strong cash flow and pay dividends. As this trend continues investors are looking for more places to get attractive returns with lower risk.
One recession proof company is currently paying a 4.2% dividend. It is in a category where people spend money in good times and bad. Food is something we all need to live. We won’t stop buying food. We will still head to the supermarket each and every week no matter how hard times get. We will go there when times are good as well.
Now when you go to the supermarket, do you and your family see and buy any of these brands:
- Baker’s Joy baking spray
- B&M Baked Beans
- Cream of Wheat
- Emeril’s sauces, soups, or seasonings – Bam!
- Maple Grove’s Farm of Vermont salad dressings, pancakes, and syrups
- Mrs. Dash salt free seasonings
- Ortega Mexican Meals, sauces, and salsas.
If so, you are already familiar with B&G Foods (NYSE: BGS). These are just a few of their brand lines. B&G Foods specializes in manufacturing, selling and distributing diverse range of food products, including cereals, canned meats, spices, seasonings, salad dressings and other specialty food products. The Company distributes these products through a network of independent brokers to supermarket chains, warehouse clubs and mass merchants in United States, Puerto Rico and Canada.
Check out the chart over the past 12 months:
The company’s share price was stuck in neutral for a while and it’s finally starting to break out again. They currently pay a $0.34 per share quarterly dividend, which increased 25.9% last year. The current yield is 4.2%. This is much better than you can get in a money market and you have the ability to see an increasing dividend as profits rise. It is a smaller lesser-known company giving it appeal as an “off the beaten path” investment idea with great potential. Unlike a bond that pays a fixed payment for the duration of time you own the bond, a company can increase its dividend year after year, providing some inflation protection.
Looking at the five point stock inspection, B&G Foods is a good value and strong fundamentals:
5-Point Stock Inspection on BGS:
Financial Strength: Positive
Valuation: Positive – Buy up to $34
Risk: Positive – Low Risk Beta (0.7)
Earnings Trend: Positive
12-month price target: $40
Bottom Line: B&G Foods (NYSE: BGS) is a good buy up to $34 per share and offers an attractive 4.2% dividend. Our 12-month price target is $40 per share. This would provide a 25% gain if you bought at today’s price and it hits our target. People will continue buying food and companies like B&G Foods should continue to see strong demand even in the toughest of times.
Today, many investors just like you are searching for a place to find stocks that can turn their nest egg into a HUGE fortune.
Since 2009, the Tomorrow’s Treasures Portfolio (TTP) has produced annualized gains of 28.25%, turning a $10,000 portfolio into $21,300!
Small cap stocks ($250 million to $3 billion) have had an impressive run over the past 87 years. In fact, small cap stocks have produced 12.1% annualized returns compared to 9.9% annually for large-cap stocks (over $10 billion), according to research from Ibbotson Associates.
Now this may seem like just a measly 2.2% each year, but the compound effect over the years is astonishing!
- $10,000 invested in large cap stocks in 1926, would be worth $30 million today…
- $10,000 invested in small cap stocks in 1926 turns into $160 million today…
- Even more amazing is the small cap value category, $10,000 invested in 1926 becomes $900 million today!
Simply put, if you want to build a fortune over the next decade, you must invest in small-cap stocks.In fact, all ten of the top-performing stocks of the past decade were small cap stocks. Chances are the top-performing stocks over the next decade will also be small cap stocks.
So…how can YOU build a fortune with small cap stocks?
Unfortunately, there is no get rich quick formula. But, good old-fashioned discipline, hard work, and a thorough research process can pay HUGE dividends.
That is why the Tomorrow’s Treasures Portfolio (TTP) was created, to help you uncover the very best small-cap stocks in today’s volatile markets.
By investing in small cap companies before they end up on the radar of Wall Street’s army of analysts, you stand to make substantially higher gains as the market drives up share prices.
This has proven to be a path toward stock investing success.
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Stocks off the beaten path
I love small, lesser-followed companies – those that have outstanding upside potential that few investors know about. Our Tomorrow’s Treasure Portfolio is all about finding tomorrow’s leading companies today!
One area I am all over is fiber optics. Fiber optics is a go-to material for wiring, especially when it comes to network cabling. This material offers three key ingredients – flexibility, strength and durability. The way fiber optics works is you have the center of a fiber optic cable, which provides the network cabling to provide a connection. You next have a strong layer of PVC that encases the cable, followed by a strain relief material (aramid fibers) that covers the PVC component. Lastly you have an outer shell, which is typically made by PVC. This provides another layer of protection and flexibility for the cable.
This is a rapid growing sector and should continue to provide amazing growth over the years ahead. Fiber optic cables are a key resource for infrastructure as cities and towns look to upgrade their systems and automate key processes, ranging from meter reading to turning on the streetlights. As more cities and towns consider the viability of smart grids and fiber optics deployment in general, the fiber optics sector should continue to see tremendous growth.
One way I am playing this trend is with a small company few investors know about. The company I am referring to is CLEARFIELD INC. (NASDAQ: CLFD). It designs and manufactures the FieldSmart fiber management platform, which includes its latest generation Fiber Distribution System and Fiber Scalability Center. Its product-lines support a wide range of panel configurations, densities, connectors and adapter options and are offered alongside an assortment of passive optical components. Clearfield also provides a complete line of fiber and copper assemblies for controlled and outside plant environments. My price target on this one is $35 – a 100% gain from current levels.
Here is my five-point inspection on the stock:
5-Point Stock Inspection: CLFD
Financial Strength: Positive
Valuation: Positive – Buy up to $20
Earnings Trend: Positive
12-18 month price target: $35
Take a look at how the stock has taken off this year:
My price target is $35 over the next 12 months as this company gains more exposure!
Bottom line: This is a thinner traded stock, small cap stock so be aware that it can be volatile. However for a portion of your portfolio, this may be a good risk/reward play that could double your money over the next 12-18 months. It is a good buy up to $20/share and could hit as high as $35 over the next year.
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Dueling Duos Portfolio (DDP) detects top-ranked large caps with building momentum. We buy them when our signals tell us they are just starting to gain notice by others. Then we sell for maximum profit when the interest intensifies.
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The “proud to own” process is all about aligning your faith and values with your investment portfolio
In a world of uncertainty, one thing is for sure – many investors want to find investments that line up with their faith and values. The “proud to own” process is all about aligning your faith and values with your investment portfolio.
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Did You Miss My December Small Cap Pick? Up 40%!
Back in December, my stock pick of the week was Steven Madden (NASDAQ: SHOO), which I predicted would rise by 40% or more based on my analysis. I gave a 12 month price target of $55-$60. Here we are just 8 months later and the stock is up 40% from my recommendation.
Take a look at the chart:
Now that the stock has hit my initial target, where do we go from here?
First let’s look at some reasons why I liked the stock:
“Why investors should consider investing in Steve Madden now:
- With net incomes of roughly $50 million, $75 million, and $100 million in 2009, 2010 and 2011 respectively, SHOO has been growing steadily over the past few years.
- Its international division accounted for only 4% of their net sales. This represents a huge opportunity for growth in the future.
- While Madden’s women division accounted for 29% of net sales, their men’s division only accounted for 8% of total sales, a major area for growth and improvement.
- Steve Madden is currently expanding, in both product lines as well as the amount of store locations (both domestic and foreign).” – From Dec 8, 2012
From its current price, I see it rising another 25-30% so I am raising my 12-month price target up to $70. So if you were fortunate to get in when I first recommended SHOO stay in! If you missed out, you have another shot to potentially see a 25-30% increase from its current price. Steve Madden (NASDAQ: SHOO) is currently a part of our Tomorrow’s Treasures Portfolio.
SodaStream surges after reporting strong Q2 numbers
This morning SodaStream International (NASDAQ: SODA) announced:
* Sales in the Americas shot up 55% to $30.7M
* Western Europe saw 26% sales growth rate
* The company’s two segments accelerated almost lockstep, soda maker kit sales were up 25% and consumables rose 28%
* Gross margin down 10 bps to 54.3%
* SodaStream lifted its guidance for 2013, with revenue expected to increase 30% vs. 27% prior and EBITDA 38% vs. 36% prior.
As a result, the stock is over 17% as of 11:00 am!
Check out the chart on SodaStream:
Jay’s Notes: SodaStream is a Tomorrow’s Treasures stock that we first recommended to subscribers back in October of 2011 when shares were around $29. It is now at $67 up 131% since we first spotted the opportunity!
As a Christian investor, I proactively seek out pro-Israeli companies in a way we can put our money into companies that support our biblical values. Companies, like SodaStream who are based in Israel and have met our moral and financial criteria offer a way to make good returns while supporting companies that embrace our Christian values. I am reminded of Genesis 12:3 – “I will bless those who bless you, and whoever curses you I will curse; and all peoples on earth will be blessed through you.”
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