+ Watch BEAM
on My Watchlist
BEAM....as in Jim Beam, one of the two dominant brands of American whiskey (aka bourbon, redneck eau de vie). What's right about picking this stock to outperform? Several things. A cursory look at the stock shows nothing interesting. Let's start by noting that Pershing Square, one of the biggest and baddest hedge funds on the planet, owns 13% of the company; they wouldn't take such a monster position if the company weren't poised for some big upside in the not-too-distant future.Second, the balance sheet tells a compelling story. The company is sitting on $3B in treasury stock , earning growth of a solid 10%.
in good times and bad times one thing remains true: people buy booze.
After verifying a report I heard that said one thousand invested in tobacco maker Phillip Morris would turn into 3.5 million dollars over 40 years (primarily due to massive reinvested dividends of a hated stock) I wanted to find a similar investment that doesn’t prey on children and poor people. I turn to alcohol for a simple, high margin business model that’s consumed daily worldwide that I’m a big fan of. About a year ago BEAM was spun off from Fortune Brands to be a pure-play spirits company. That means I get focus, strong brands (Jim Beam, Skinny Girl, Courvoisier, Pucker, Maker’s Mark, Pinnacle, etc.) a small market cap (9.8 billion), with a 1.46% dividend that I believe will be constantly raised throughout the decades as the company grows and compounds. PEG 2. Starting with 1.3% of portfolio.
quality company,and product
I would rather go with BUD or STZ
With recent acquisitions and record of solid performance, with a decent dividend kicker, BEAM is a quenching choice for long-term investing.
Mmmmmmm. Makers Mark
Now that they are a straight beverage player, it should help management with their focus and continue to grow this company. They're a good mid-size company with plenty of room to grow.
Beam, Inc is the 4th largest premium-spirits company in the world, the 2nd largest in the United States and Australia and the largest US-based premium-spirits company. The liquor industry is a defensive-industry. People buy liquor in good times and bad; in good economics and bad economies. And Beam has recently become a pure-play company in this defensive-industry.Beam has a very diverse liquor brand-portfolio. To name a few of their many brands, they include:- Jim Beam: the #1 Bourbon worldwide.- Maker’s Mark: the #1 super-premium Bourbon brand worldwide.- Teacher’s: a huge emerging-market brand for Beam. Teacher’s is the #1 Scotch in India and the #2 Scotch in Brazil. - Sauza: the #2 Tequila worldwide.- Courvoisier: the #1 Cognac in the United Kingdom and the #3 Cognac in the United States.- Canadian Club: the #3 Canadian Whiskey worldwide.There are two main plays with Beam. The first is Beam as an emerging-market play. The second is Beam as a potential takeover play.The spirits market is mature industry in developed countries. Beam has been taking market-share away from other companies in these developed countries, such as the United States and Australia.Beam is also quickly growing in emerging-market countries. In these emerging-market countries, premium liquor brands are in high demand from a growing urban middle-class. Currently, emerging-market countries make up about 15% of Beam’s total sales. Beam looks to significantly grow that percentage in emerging-markets over the coming years.As a takeover target, Beam is the only major pure-play liquor company that does not have significant barriers for another company to acquire it. In October 2011, Beam (formally Fortune Brands) completed the process of spinning-off and selling all of its unrelated-businesses to become a pure-play spirits company. This process helped to unlock shareholder value and made the company much more attractive to potential acquirers who weren’t interested in Beam/Fortune Brands’ former businesses.Beam sold off their golf division and used the net proceeds of about 1.1 billion USD to pay down debt. And in October 2011, they spun-off their home furnishing and hardware businesses, which resulted in a 500 million USD tax-free dividend to Beam to pay down additional debt. The end-result is a pure-play global spirits company, significantly-less debt and a potential takeover target.And should Beam not be acquired, the stock should still be owned. The company pays a decent dividend, the balance sheet is strong and the company has great growth prospects.
I would recommend adding to this name at a price under $49. It won’t be a homerun and you have to buy into the company either being acquired or investors continuing to believe the company will be acquired. It just makes too much sense for Beam to be acquired at some point in the future. I think you see $70 by the end of 2013, which is a 40% return in two years, a threshold that would please almost any investor. You would also pick up 3% or so from dividend payments. The real downside risk comes from the company openly admitting that they are not for sale. But even if that happens, you get a very steady company with earnings-per-share growing approximately 10% in a favorable industry. Not a bad downside.
Times are bad = people drink more.
Because booze is an addictive product for which demand goes up when times are hard.
No matter what the economy does, people will consume liquor. If it goes well, they'll drink to celebrate. If it does poorly, they will drink to forget. Through all of it, Beam will make sure there's plenty of booze to go around. Besides, you can't make good cole slaw without Jim Beam!
Based soley on current performance vis-a-vis, if BEAM can bring its operational performance in line with DEO, it is worth about $55-$60 / share.I do think this company has a better portfolio of brands as compared to its market size than DEO, and should be able to attain better growth through brand investment, increasing the value of this company, although I am not going to attempt to quantify it.Also BEAM has lots of potential overseas.I am not the only one who sees this, expect the share price to rise soon because of smart buying, or a buyout in short order from private equity or perhaps DEO itself.As of now this is my largest holding.
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