Why pickles are now trumping vacation homes
Like it or not, a high-dividend slow grower is now a better buy than a fresh-faced, fast-growing Internet monopolist.
Which would you rather own: a fast-growing, profitable, budding monopolist in the vacation home rental business that shot the lights out on its last quarter, or a slow-to-no-growing purveyor of packaged goods at the supermarket that reported a quarter that was disappointing by its own admission?
If you had to think about this answer even for a second, you should fold up shop or go watch the NBA and NHL playoffs, because the answer is pretty simple: You would much rather own the no-growth food company.
Let me make it really easy: The slow-growing food company is B&G Foods (BGS), with a 4 percent-plus dividend yield, which can grow either from the stock going down or from the dividend going higher.
The fast grower? It's a website manager that takes a cut from vacation properties it features online at its eponymous HomeAway (AWAY) site.
Yep, in this tape you need to be eating B&G pickles and owning the stock and staying away from either the real HomeAway site or the stock.
Here's what's so wrong. HomeAway is a monopolist with $3 billion in market capitalization. It makes good money and has a perfect balance sheet with a ton of cash because it did a cheap-as-can-be convert deal. It is growing north of 30 percent. It should earn $1 per share in 2016. Yet I think you wouldn't want to buy this stock until it sold at a price-to-earnings relative to growth (PEG) rate of slightly less than 1. That means it can still fall another 10 percent, easy. In fact, I might be too aggressive even recommending that tight a bid underneath.
But B&G? I would buy it here. In fact, I would buy it up 1 point from here, and if the company is able to regain some of the lost momentum it suffered from winter weather, I believe it could rally 10 percent from here. And that's not including the dividend.
I'm sure there are people reading this who have said that I have lost my mind. All I can say is you are losing your mind if you don't see this happening right now. I'm not asking you to like the sea change. I'm simply asking you to acknowledge it. Because, like it or not, it's happening.
Jim Cramer's Action Alerts Plus: Check out this charitable trust portfolio to see the stocks Cramer thinks could be winners.
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I can hear him now........ "Help me Beav"
We used to have 7 million small farms and now we have less than 3 million. So now we have huge steroid grown cucumbers made into pickles!
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Almost 100 comments on Pickles....Sweet Geezus...
Oh wait a minute 90 of them aren't about pickles...
I picked pickles back in the late 50s, maybe early 60s..??
First year I was a picker, lots of bee stings...
Second year I was a Straw boss in the field, because I lasted 2 years.
We made most of our money off "gerkins or jerkins", something like that...?
Miss Lilly said "I never picked pickles", instead they were cucumbers, they became pickles later after being brined....But I still called them pickles, because I was the picker; She never did.
he has yet to explain how 4% yield per year helps you when the stock drops 10% or worse yet the company suspends the dividend like BAC just did.
much better would be to own the DIA which gives you a sure 2+ % yield paid monthly , while diversifying you across the entire dow 30
cramer can't beat the DIA and neither can 80% of hotshot mba's managing high fee mutual funds.
but if individual investors figure this out who would cramer have to ripoof with his nonsense
Obummer........ "What have you done Beav?" ..."My ratings are lower than whale shlt"
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