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McCormick & Company, Incorporated Message Board

  • vwdiesel10 vwdiesel10 Jun 18, 2012 3:12 PM Flag

    Anyone getting nervous?

    Anyone here getting nervous over the quickening rise in the share price? I would have expected these levels by maybe October, but not quite this early. Not sure if this is getting ahead of itself or not. Any thoughts?

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    • Hmmm... didn't think of that. Have to look over the last annual report to see what kind of share approval they have.

      At any rate, I can only hope this coming year proves as solid as the current one. I started my current positions (after several shorter-term ones previously) August 12, 2001 at $45.75. Have reinvested everything since then and am up 25.23% on my total cost per share (including secondary purchase December 22, 2011 at $50 even). I know management cites their ability to return 10-12% in value to shareholders, but this is absolutely incredible. Truly wonderful investment for being non-tech sector.

    • A shareholder meeting would only need to take place for shareholders to vote on authorizing enough shares to accomodate the split. If MKC has enough shares outstanding they can split without authorizing new shares, Therefore no shareholder meeting would be needed.

    • Yeah, that's what were thinking.. but the time needed to approve is tied to the annual shareholder meeting, so at best it would be at least 1 year in the making for the split. The good news would be that the stock price cold very well be approaching $65 to $70 at that point if the earnings pick up due to the recent acquisitions continuing to grow at a fast pace. 2:1 split would only put the price down to low to mid $30's, and not push this down into the $20's, allowing the shorts to possibility mess around with it for a while because it wouldn't take much capital to short large positions at the lower prices.

      Honestly, I don't care one way or the other about a split. I don't think they do much good (or much harm for that matter), so I don't always see a need for them. Especially when for a stock trading well below the $100 mark. For a $100-150 stock, a 2:1 or a 3:1, if the float is already pretty low, could work to allow people to pick up larger blocks for leverage on the name. But at these levels, it's not exactly overly restrictive. On the flip side, I don't think they should push for a buyback program either. The cash should be used for paying down some more of the debt, for a few more bolt-on acquisitions in different regions that have solid growth, and/or for just piling up in retained earnings to help lift the equity at a faster pace. Now, if they cannot put the cash to use at a high enough rate of return, that extra cash might put a dent in the ROE, so they will have to manage that. It might then make more sense to leave it to debt repayment, internal and acquisition expansion as well as boosting the dividend a bit more more than the usual increments.

      Other than that, I have absolutely no problems/complaints with the company.


      Hmmm..while I'm thinking of it, what do you guys think about the potential for MKC to perhaps buy up land and/or actually direct invest in the production of the commodities they rely upon, especially those already under pressure from growers switching to other products. I'm thinking black pepper and the like on this one.

    • Management can announce a split, but it would have to get approval from the Board of Directors at the next quarterly meeting. In which time, if approved, would then announce the distribution date of the new shares. Coke just did this, as many companies do, they will announce a split first and then get Board approval.

    • Hmmm, might be the end of that possibility. Haven't had a chance to read through the report or statements yet, but looks like the earnings are holding up incredibly well. Declining fuel/commodity costs should be good going forward as well. Economy not exactly good enough for people to start flocking to restaurants, but well enough with declining fuel prices for people to maybe splurge on home cooking ingredients/barbeque essentials over the summer. That should help the likes of MKC on the domestic front. Full year guidance being held at roughly $3 per share should have the company solidly at $60 pretty soon based on top of the mark TTM P/E but mid-range against next year and two years out.

      MKC consistently demonstrating itself as buy and wish for hitting the lottery to buy up as much equity in the company as possible-- if only, if only.....

    • Good point. Agreed.

    • Got a bit of the pullback I was figuring on today. Might go closer to $50 before all is said and done. Pull up the one year chart on Yahoo! and add the RSI. Notice a pattern? Divergence in the peaks and bottoms of the stock price and the RSI-- the stock makes new highs, but the RSI makes lower highs until it peaks around 50, then quick pullback, bit of a rally and then the rug gets pulled out. Last time it dropped about $5 on the quick whoosh down-- who knows about this time. Keep cash handy-- might get a chance to double down on this shortly.

    • I would not be surprised if they announce a split during the earnings announcement.

      Based on charts and historical the price is about right for them to split the shares. I've been very slowly adding to my position all year based on this.

      This is not a trade stock for sure. People buy it and put it away so you have to pay up to get it.

      • 1 Reply to ARCADIAN4U
      • Yes, that was another possibility I was thinking of. It seems about time in both duration between splits and overall market price for the company to at least consider a split (based on their history).


        Agreed- very far from a trade. I consider this an ultimate example of core/nearly "forever" position for a portfolio. The spice trade has been around for over 2,000 years-- I'll bet on it continuing for beyond the imaginable future.

        I am very curious to see if they announce or hint at any leads for possible entrance into South America in the coming year. In the last conference call and big investor presentation they mentioned they are always on the hunt for acquisitions to get a foot in the Latin American door, so to speak. Interesting to see if they can make that happen. Need to hear as well how the crop situation is going-- are farmers turning away from long-maturity crops to the short-duration cassava plants and the like. Reading through the data from the 2012 Spice Conference presentations this week to pick up some additional data.

 
MKC
69.02+0.79(+1.16%)Oct 24 4:03 PMEDT

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