Oct 4, 2012|
Stock Talk - Kevin Dreyer, GAMCO Investors Inc.
Transcript - Not for consumer use. Robot overlords only. Will not be accurate.
Our guest is Kevin -- he's the associate for the portfolio manager of the very well respected Gabelli asset mutual fund. Kevin good morning welcome to the show. I get -- and -- thank you haven't yet still located in -- New York by the way. We are we are just outside of New York City very good all right. I want to talk to about Samir picks the first one I've never heard of before it's -- as international incorporated. -- -- tells about this. Source of moderately. Is it's public in new company it's -- -- -- one this is really the old Kraft Foods so what Kraft did. That I Irene Rosenfeld -- -- you know I decided she could split the company into two pieces actually spun off in North American retail business. Which is keeping the Kraft -- name that's more of a slow growth. I castill generation company that going to be -- By -- -- and leave the seat you look at entity. And then cracked renamed itself -- at least not focusing on its global -- business so this. Compete in categories like biscuits. Chocolate candy in raw and gum. With brands which is Cadbury. Trident and teen Oreo. And Ritz Crackers. It's about it toward sixty billion dollar industry and high single digits. And the good news is that plans are very important and they have the right Brett. So where they growing South America India China. All of those actually Russia as well. They've bought isn't that the business it bought Cadbury few years ago. And -- actually had very very good distribution and specifically into those markets you mentioned India. And pretty much all of Latin America so those are are very good markets for them but really you mildly disagree surrogate. For the emerging middle class around the world as people -- middle class. They trade up to branded food products. And my belief is selling. Products in the categories that that they about it. It's 28 dollars a share today what do you think it to belly what do you guys think it's really worked. Well as you probably know little long term investors so we're really looking out over the next three to five year. And they're gonna do -- at at least a dollar fifty in earnings next year. We think that's a very conservative not conservative estimate we -- earnings. -- double over the next five years and the stock could follow. So you know politically looking up to 2016 you think this could be a fifty dollar stock. Very get married let's take a look at beam at BE. 8 -- is this field sunbeam. No not -- actually -- Fortune Brands this is another. Company that was subject to spin off. What we call it financial engineering at circuit belly that's. One of the things we try to focus on is -- catalyst or something going on. -- -- a lot of course -- the value of the company so fortune had three divisions. I distilled spirits. I would ball and what they called home and security things like windows two worst cabinet and master lock -- So they ended up selling off their golf business based -- off. On the security business and it has a pure play spirits company -- redeem themselves being ink. In which they don't beat beat Jim beam bourbon brand. Among many others which is makers mar 2000 and skinny girl that is a great business. A spirited about it at a billion dollar global. Category growing icicle that it. Very high margin. Very strong -- cash flow generation. And the whole industry right now is taking place so that allows. A significant portion of that. Priced dropped to the bottom line which is good for the industry and good can be. Kevin why why -- they paying more of a dividend Jamaican four dollars a share which is robust they're priced earnings ratio is low. It -- only paying out 82 cents or one point 4% you think they might increase their dividend. Yes so we we estimate we're gonna do about 240 to sixty but here you're right that the the dividend yield is one point 4%. They are investing. Some back in the business they also just did an acquisition they bought the pinnacle vodka brand. Recently so they haven't done and talk and acquisitions. But what's really adjusting their cute things that are -- about being. Wanted to their expertise is an American bourbon whiskey and that is currently the fastest growing subsequently been spirited they've got. Leading brand in the category that are doing the best. And -- kill it's a free flow pure play company. Many the other companies which is round one -- apparent over Carter critical control party actually -- controlled even in the public. So fifty yards or -- -- only get bigger. And spirit. Especially in the US and an American bar and even quicker way to do it we think its potential take out -- over the next couple years. What kind of premium maybe ninety dollars. Yeah I mean we think. Based on 2013 numbers we can acquire easily pay eighty dollars per share. Okay our -- our last one and we don't have a lot of time but let's take a look at symbol or SM BL. They're gluten free. Manufacture of food -- street Smart Balance. Yeah exactly as Smart Balance the only Smart ballots in or else. Spread businesses these are kind of heart healthy sporadic. And what they did a couple of years ago bought a company called will you know which is what the leaders in gluten free. Products which basically don't have to meet and there are certain people who have. Either -- activities or some sort of gluten sensitivity. David followed that up in July this year with the acquisition Moody's simply don't have the two leading brands in the category. The small category only about two and a half billion its -- that it's going to be over five billion. Like fifteen retailers are -- -- shelf space to keep little like and for instance -- To -- I'll dedicated to gluten free products. They are the leader actually renaming themselves older brands. In coming months but -- have very very strong top and bottom line -- and this is another stock that we think could double over the next three or four years. And could also be a take out candidate has a larger food beverage companies wake up to what's going on include for. In years -- all these in your fund. We get out that's sort of figured Kevin thank you clear the best appreciate it. Thank you so much. Look forward to speaking to get him. Surrogate Evan -- associate portfolio manager of the Gabelli asset fund. -- three stock picks well you just heard them I'll give you the symbol the price target and the dividend yield if they have a dividend I'll give you the dividend yield. When we come back stay let us June night and Barry are strong on the financial exchange.