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Why McCormick Stock Rose 12% in May

By Demitri Kalogeropoulos – Updated Jun 4, 2020 at 8:53AM

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Investors are betting on a sustained uptick in demand for spice and flavoring products as consumers spend more time at home.

What happened

McCormick (MKC -0.83%) shareholders outperformed a rallying stock market last month. Shares rose 12% in May compared to a 4.5% increase in the S&P 500, according to data provided by S&P Global Market Intelligence.

The boost put the spice and flavorings specialist back in positive territory so far in 2020, with shares modestly ahead of the market through early June.

A persons adds spice to a piece of meat on a cutting board

Image source: Getty Images.

So what

McCormick didn't announce any operating news last month, but investors still found a few reasons to feel more optimistic about its global spice business. The chain said in early April that sales volumes in its consumer-focused division nearly doubled as people hunkered down in their homes during the start of social distancing efforts. Executives said they saw those trends continuing at least through the short term, too.

The company also announced in late May that it was busy hiring more employees and had just issued premium pay incentives to much of its workforce. These moves suggest the chain is still seeing elevated demand for its consumer staples products even as the restaurant industry operates at a fraction of its total capacity. 

Now what

McCormick will announce fiscal second-quarter results on June 25 in a report that will show exactly how its demand trends shifted through the COVID-19 outbreak. Investors will be focused on management's comments about where sales volumes are settling, though, now that the threat of the virus is fading and people are relaxing their social distancing efforts.

Demitrios Kalogeropoulos has no position in any of the stocks mentioned. The Motley Fool recommends McCormick. The Motley Fool has a disclosure policy.

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McCormick & Company, Incorporated Stock Quote
McCormick & Company, Incorporated
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