Drip
Portfolio Report
Wednesday, January 7, 1998
by Randy Befumo
([email protected])
ALEXANDRIA, VA (Jan. 7, 1998) -- Over the past month and a half, we have looked at approximately twenty major companies that sell branded, packaged food. We set out on this journey because the consistent growth, high dividends, solid cash flows and regular share repurchases available in this group of companies make them ideal anchors for any portfolio. Our general plan of capturing leading companies in premiere segments of American industry has naturally lead us to packaged, branded food product makers as our third potential investment. Over the next few days we will look at the fruits of our work and try to pick one company to begin Dripping into.
Over the weekend, I compiled a bunch of information on the companies that we have looked at, as well as a few we have not, in order to have a way to compare all of these companies. This information is in a pretty huge spreadsheet (Excel 95 & 97 format) that is available in table format on our Web site (at http://www.fool.com/dripport/1998/BRANDE1.xls.) A warning, though. Many of the terms involved in this table may seem arcane to the average Dripster. Ideas like return on invested capital (ROIC) or P/Es based on run-rates are more advanced than what we normally do here in the Drip Portfolio, but they do play an important role in the way that I select stocks. At the very least, you can glean some decent comparative information from the spreadsheet.
For a few of the companies involved in this survey, recent events have made historical results a little tricky. For instance, for BestFoods and PepsiCo two rather large divestitures make it difficult to figure out what the correct numbers for operating earnings and future estimates are. A pending spin off from Campbell Soup is equally complicated, as the financials for the company are going to change in the so distant future. Wherever I had to make an estimate for a number rather than dealing with an exact number, I bolded it on the spreadsheet. In addition, for shareholder's equity I added back the accounting deduction for share repurchases, as I wanted to compare return on equity on a level playing field among all companies. Readers should be aware that they are not to take these numbers as gospel. You should double-check all calculations before making your own investment decisions.
For readers without Excel 97 for Windows, the following is a very abbreviated version of the spreadsheet. It has most of the major moving parts on which Jeff and I will base our decisions on which companies make it to the second round. In order to make this an interactive, readers should feel free to post their top five from this list on the Drip Message Board. We will compile the results to see where the readers' interests lie, and then Jeff and I will reveal our own personal preferences tomorrow. So hit that Drip -- Companies Message Board and let us know what you are thinking. (AOL users lease expand the window to view table.)
Ent. Value/ Oper. Debt/ '98 Sales Margin Sales P/E Yield Anheuser Busch 2.2 18.7% 36.8% 17.3 2.4% BestFoods 1.6 11.5% 17.3% 21.2 1.8% Campbell Soup 3.5 19.0% 14.3% 24.8 1.4% Coca-Cola 8.6 26.3% 5.1% 39.4 0.8% Conagra 0.7 5.5% 13.5% 17.8 2.1% Flowers 1.5 6.6% 19.3% 18.8 2.2% General Mills 2.3 16.2% 26.2% 19.9 2.9% Heinz 2.4 9.5% 26.6% 22.0 2.4% Hershey 2.4 13.4% 32.2% 24.1 1.4% Hormel 0.8 5.0% 5.9% 16.2 1.9% Intl Bakeries 0.9 6.8% 6.5% 19.6 0.8% Intl Home Foods 2.8 11.2% 86.0% 25.7 0.0% Kellogg 3.2 16.3% 18.0% 26.3 1.8% Nabisco 2.0 11.2% 49.5% 26.3 1.5% Pepsico 2.7 11.3% 17.3% 26.3 1.4% Philip Morris 1.7 17.9% 17.4% 13.6 3.5% Quaker Oats 1.6 9.9% 17.7% 23.5 2.2% RJR Nabisco 1.3 14.9% 56.3% 11.8 5.5% Sara Lee 1.6 8.4% 11.1% 22.0 1.6% Tootsie Roll 3.7 23.7% 2.1% 22.6 3.5%
TODAY'S NUMBERS
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