Pat Dorsey: Hi! I’m Pat Dorsey, Director of Equity Research at Morningstar. To take another times, people have nationally turned to consumers tables product that we all used we got all this in the environment or the economic environment companies that continue do have demand regardless and sort of how consumer are fairing. And I will talk about three of them today and we think we attractive right now, Procter and Gamble, McCormick and Molson Coors.
Proctor and Gamble is you know of course one of the largest costumer parts companies in the world. They are merger with Gillette has done very well over the pass few years. They interestingly manage to Steve Off one of the threat from private level products by often offering two products and in brand the category. For example, I think your spending too much on pampers will this trade down two lapse I think your spending too much on Tide will trade down to Gain, both all which are brands that Proctor and Gamble owns. The company is a free cash flow of machine, rock solid on the operating font very few a balance sheet worries. Shares are not dirt cheap right here but our trading about 15-20% below our fair value estimate. We think they are still a pretty attractive holding.
Now, Molson Coors is a very interesting story because beer volumes have been quit weak over the past several quarters. Have people have share to do both, micro booze into wine and spirits. So, the story here really is an volume girl, people drinking a lots of more beer. The story here is call savings, that by pushing put Molson and Coors together especially giving their joint venture with Miller as well you are enormous costs savings at this firm and in a very slow growth environment compounded of course by the current economic tools margin expansion through cost cutting is maybe perhaps one of the few routes to earn this growth that your going to see. There are costs cutting is already ahead of schedule and we think there is a lot more cost to be cut other business. We think Molson Coors is very, very cheap right now. Perhaps not the widest of wide mode firms but one is very strong it’s a do openly position in Canada. And one with should have significant margin expansion potential giving the cost savings that are coming down the track.
Moving from a solid but not phenomenal company to one to have probably one of the widest modes I know McCormick. They absolutely dominate the spice industries in the US. Pretty much any spice you’re going to buy on a grocery store shelves, all are good McCormick made those spices. Spice volume doesn’t really decline or you know increase year to year. American don’t really serve the side, gosh I like spicier food, I like brander food from one year to the next so this is a remarkably consistent firm, shares are trading at around of 20% discount to our February estimate. Since not a company that’s going to you know be a home run, double or triple next but it’s one of the most consistent ones we know one of the one with the—in my opinion widest modes that I’m aware of because it’s absolutely dominates in the dish industry that will be very hard for another player to enter. It’s very good margins into it, very cash flow, motivated phase out in the dividend and again the demand for spices just in very too much year to year which have shall by be the kind of thing you want to talk in your portfolio as the market bounces around 3-4% a day. I’m Pat Dorsey and thanks for watching.
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