* Earlier this week we traveled with Jarden management for a series of upbeat meetings with investors. We came away from the meetings with the belief that: 1) business trends remains stable; 2) organic growth for 2H08 is highly achievable; and 3) the stock remains undervalued compared to its historic and peer multiples.
* In our opinion, there remains a high level of skepticism regarding organic growth posted in 2Q, essentially questioning how much was artificially boosted by tax rebate checks. While we do believe that JAH and other consumer companies saw a lift from these distributions, we don?t believe the entire growth can be simply explained away by the tax rebates. JAH indicated that its business trends remain good in July and early August, several months after the checks were mailed. In fact, Coleman had one of its best weeks ever during July. Furthermore we believe the company?s Outdoor Solutions (camping, team sports etc) and Consumer Solutions (toaster ovens, etc.) are benefiting from the current trend of ?stay-cations? and a greater proportion of food consumption at home.
* JAH has implemented mid single-digit price increases for 2H which should help achieve its organic growth targets in 2H and offset higher commodity costs. We also believe the company could see some benefit from the recent pull-back in oil prices in 4Q and definitely in 2009
* We believe JAH?s portfolio of #1 brands will benefit from the brand reduction program (eliminating #3 and #4 brands in certain categories) currently occurring at WMT. In fact, JAH will displace 30+ vendors in the fishing category for 2009 and gain up to 20% greater shelf space.
* We continue to believe JAH?s valuation (8.2x our 2008 EPS est.) is compelling. In our opinion, JAH should return to its historical 12x multiple as it generates strong cash flow and investors realize that these estimates are achievable.