29.17 0.00 (0.00%)
After hours: 6:11PM EDT
|Bid||29.14 x 1100|
|Ask||29.43 x 800|
|Day's Range||27.14 - 29.65|
|52 Week Range||21.61 - 31.99|
|Beta (5Y Monthly)||N/A|
|PE Ratio (TTM)||20.70|
|Earnings Date||Mar 09, 2020|
|Forward Dividend & Yield||0.60 (2.27%)|
|Ex-Dividend Date||Mar 12, 2020|
|1y Target Est||33.88|
We’re in a bear market now, with the major indexes down nearly 30% from their most recent peak. The S&P 500 has fallen from 3,386 – it’s high point on February 19 – down to 2,437 as of this writing. The fall hasn’t been smooth; stocks have bounced down a steep slope marked by sharp spike and deep troughs.So, the markets are stormy, and the bears are here, but a savvy stock trader should always remember what a bear does when the weather changes: it hunkers down, and hibernates for the long haul. It’s a defensive strategy, and investors should take the hint. Now is the time to pad the portfolio with defensive stocks, to soften the blow.What we’re looking for are stocks involved in essential goods and services – things that people need no matter how the markets perform. The stocks we’ll look at in this list fit that profile, one produces basic kitchen supplies, one offers digital cellular and mobile data services, and the third – particularly important in today’s conditions – produces pharmaceuticals and surgical supplies. As might be expected from stocks so uniquely suited to the current environment, all are Buy-rated and show an upside potential in excess of 15%. And one more bonus: each pays out a reliable dividend, providing an income stream for return-minded investors. We’ve run them through the TipRanks database, and pulled up the details. Let's dive in.Reynolds Consumer Products (REYN)Most of you will be familiar with Reynolds Consumer Products, simply because the company’s products are so ubiquitous. Aluminum foil and pans, plastic cling wrap and storage containers, oven cooking bags, even Hefty brand trash bags – all are products that most modern kitchens simply cannot do without. A necessary niche is a fine foundation for a defensive stock, and REYN has a solid one.Despite the good foundation, REYN pulled in lower Q4 revenue year-over-year, $835 million compared to $907 million the year before. Net income, however, was up by 7% to $90 million. In forward guidance, the company projects fiscal 2020 net income of $320 to $350 million.The company pays out a 15-cent quarterly dividend, which annualizes to 60 cents per share. The yield, at 2.3%, beats the average dividend yield among S&P-listed companies, and is nearly double the current yield of US Treasury bonds, making this stock a sound choice for income investors.Reviewing the stock for Credit Suisse, analyst Kaumil Gajrawala marks Reynolds as his "top defensive pick in an uncertain world." The analyst rates the stock a Buy, and sets a $34 price target that implies an upside of 24% from current levels. (To watch Gajrawala’s track record, click here)Supporting his view, Gajrawala writes, “Reynolds noted possible near-term benefits from inventory/pantry-loading and lower commodity costs, neither of which is reflected in guidance. Retailers are increasing orders given higher-than-normal consumer demand, shifting some volume near-term (and leading to increased usage). Also, recent declines in material prices, if sustainable, would have a positive impact on earnings going forward.”Overall, REYN shares get a Strong Buy rating from the analyst consensus, based on 9 reviews. The reviews include 7 Buys and 2 Holds. Shares are affordably priced, at $27.58, and the average target of $34.78 suggests room for a 26% upside potential in the next 12 months. (See Reynolds stock analysis on TipRanks)Verizon Communications (VZ)Next up is Verizon, a $225 billion market cap telecom giant, and the second largest wireless service provider in the US. Verizon boasts over 118 million wireless customers, and saw $132 billion in revenue for fiscal year 2019. This company is truly an 800-pound gorilla in the telecom industry.It’s also a very clear defensive play for investors. The coronavirus response is likely to increase the need for Verizon’s services, as authorities impose stricter ‘social distancing’ and quarantine restrictions on populations. Digital wireless services will be a convenient way for peers to remain in contact without violating those strictures.Still, VZ could have entered the current downturn in a stronger position than it did. The company’s Q4 earnings just missed the forecasts, despite a minor year-over-year gain. The $1.13 reported was just above the $1.12 year-ago number, and just below the $1.15 expectation. Revenues did better, and at $34.78 billion beat both the forecast and 2018’s Q4.Of the stocks on this list, Verizon offers the highest dividend yield, at 4.5%. The quarterly payment of 61.5 cents annualizes to $2.46, and the company has a 12-year history of maintaining reliable payouts. VZ has increased the dividend three times in the past three years, and the current payout ratio, of 54%, shows that the company has plenty of room for further increases.Colby Synesael, 5-star analyst with Cowen, upgraded his stance on VZ from Neutral to Buy, while maintaining his $61 price target. That target implies an upside potential of 16%. (To watch Synesael’s track record, click here)In support of his upgrade decision, Synesael wrote earlier this month, “[W]e look to take advantage of the recent sell-off with the stock now trading at a dividend spread not seen in 7+ years. We see low EPS risk considering its U.S.-centric utilitylike wireless business and a well-covered dividend currently yielding 4.5% with outer year catalysts tied to “true” 5G and building FCF.”Verizon’s Moderate Buy analyst consensus rating is founded on 12 reviews, including 5 Buy-side and 7 Holds. The stock is priced at $52.80, affordable for a true blue-chip giant, and its average price target of $63.22 indicates a 19% upside potential in the coming year. (See Verizon stock analysis on TipRanks)McKesson Corporation (MCK)With the last stock on our list, we turn to the pharma sector. Texas-based McKesson is a big name in medical technology, as big as its home state. The company provides software solutions for half of all US-based health systems, 25% of home care agencies, and 20% of all doctor practices. The company’s other main divisions are involved in medical supplies and equipment, and the 3,500-location Health Mart pharmacy chain. McKesson has its fingers – or really, its whole hand – in pretty much every part of the medical industry pie.McKesson’s huge presence in its field underlies its profitable position. The company’s fiscal 2020 Q3 earnings came in ahead of the estimates, with EPS beating the forecast by 7.6% at $3.54. Even more impressive, the EPS was up 12% year-over-year.The company managed that impressive earnings performance despite quarterly revenues coming in a half-percent under expectations. The $59.17 billion reported was up more than 5% yoy.On the dividend side, MCK is highly reliable. The company has been paying out quarterly dividends for 20 years, and has raised the payment three times in the last three years. The current dividend, 41 cents per quarter, or $1.64 annually, sounds small, and the yield is only 1.2%, but payout ratio is only 10%. For income investors, this dividend is as safe as they get – the company earnings are sound, the payment is easily affordable, and there is all sorts of room to raise the ceiling should management choose. Defensive-minded investors could not ask for a clearer bear-market play.This stock also received an upgrade recently, from 4-star analyst Glen Santangelo of Guggenheim. Santangelo’s $147 price target implies a modest upside of 8%, in cautious support of his newly raised Buy rating. (To watch Santangelo’s track record, click here)In his comments on the stock, Santangelo said, “We believe the recent underperformance of MCK shares vs. the market and supply chain peers has provided an attractive entry point for this defensive health care utility. As we have written for much of the past year, we believe the US distributors are operating against an improved fundamental backdrop - giving us confidence in the company's core execution. MCK has a strong FCF profile, boasting a ~14% FCF yield…” That FCF yield guarantees the company’s dividend.Like Verizon, this blue-chip stock has a Moderate Buy rating from the analyst consensus. The stock’s recent underperformance – noted by Santangelo – is reflected in the mix of 5 Buys, 4 Holds, and 1 Sell set in recent weeks. Shares are not cheap, priced at $129.11, but the average price target of $166.89 suggests room for 31% growth to the upside in the coming year. (See McKesson stock analysis on TipRanks)
NEW YORK, NY / ACCESSWIRE / March 10, 2020 / Reynolds Consumer Products Inc (NASDAQ:REYN) will be discussing their earnings results in their 2019 Fourth Quarter Earnings call to be held on March 10, 2020 ...
Reynolds Consumer Products Inc. ("Reynolds," "RCP" or the "Company"), today reported results for the fourth quarter and fiscal year ended December 31, 2019.
Today Reynolds Consumer Products announced a monumental milestone for its groundbreaking Hefty® EnergyBag® program. The innovative program, stemming from the brand's commitment to helping create end-of-life solutions for plastic waste across the United States, has officially diverted over one million pounds of hard-to-recycle plastics from landfills.
After a week that saw loss after loss, the market bounced back. Yesterday, the Dow Jones index, which houses 30 blue-chip names, posted a record one-day point change. Putting an end to its seven-day losing streak, the index climbed 1,290 points higher, its largest single-day increase since December 2018. As for the other two major U.S. indexes, both the S&P 500 and the NASDAQ notched their biggest percentage gains in the last year.Having said that, as the number of coronavirus cases around the world approaches 90,000, Wall Street isn’t sure that better days are ahead. During an interview, Cowen’s head of market strategy Chris Pollard stated, “We’re not completely out of the woods…The market by and large had been telling us this situation was going to deteriorate, [and] equities only caught on to that last week.” He added that any growth in the short-term is “unlikely to hold.”Before rushing to sell-off holdings, investing firm Goldman Sachs reminds investors that compelling opportunities can still be found, pointing specifically to initial public offering (IPO) stocks. Using TipRanks’ Stock Screener, we were able to pinpoint 3 newly public names that are Buy-rated and backed by the analysts from Goldman Sachs as well as the rest of the Street. To top it all off, each stands to see some serious gains in the next year.Casper Sleep (CSPR)Online mattress retailer Casper Sleep burst onto the scene just last month on February 6, but it has already attracted significant attention. In its first day on the public market, the stock gained 12%, adding $2.50 to the $12 IPO price.While the market cap now lands at $358.6 million, at one point while the company was privately-held, it earned unicorn-status thanks to its $1.1 billion valuation. This drop has spurred some concern among investors, but Goldman Sachs remains optimistic about CSPR’s long-term prospects.Writing for the firm is analyst Alexandra Walvis, who points out that significant health and wellness-based tailwinds have steadily been benefiting the global sleep product market. Additionally, even though the space is known for being highly competitive, Walvis is expecting to see a “more rational environment” in the future. She added, “CSPR is uniquely positioned as a holistic sleep brand, with product and marketing creating a powerful connection with consumers and potential for a strong moat.”On top of this, Walvis cites its omnichannel strategy as a key point of strength. According to her estimates, the analyst notes that CSPR’s store count is expected to reach 180 by 2022, up from 60 as of the end of full year 2019. Based on solid unit economics, this should fuel substantial growth in terms of sales and earnings. It also doesn’t hurt that growth in brand-right partners such as Target and Costco as well as other retailer additions stand to boost wholesale sales, with sales from this segment predicted to increase from 20% to 33% of total sales.Given its attractive valuation and the fact that its marketing spend leverage has set it up for profitability, Walvis believes CSPR is bound for greatness. “While we recognize execution risk and a competitive marketplace, we believe these concerns are more than adequately reﬂected in shares given depressed valuation, and see upside to shares from current levels,” she commented.In line with her bullish thesis, Walvis kicked off her CSPR coverage by publishing a Buy recommendation. Along with the bullish call, she set a $16 price target, implying 77% upside potential. (To watch Walvis’ track record, click here)Looking at the consensus breakdown, 5 Buys and 3 Holds assigned in the last three months make the Street consensus a Moderate Buy. At $13.75, the average price target puts the upside potential at 52%. (See Casper Sleep stock analysis on TipRanks)Reynolds Consumer Products (REYN)Reynolds has made a name for itself as one of the top household products providers, and is the powerhouse behind the famous Reynolds Wrap aluminum foil and Hefty brand. Its January 30 market debut was certainly impressive, raising $1.2 billion. As the IPO was the first billion-dollar listing of 2020 in the U.S., it’s no wonder Goldman Sachs’ Jason English is excited about REYN.In a recent research note, English told clients, “We believe REYN is on the verge of driving an inﬂection in volume/mix driven sales growth while at the same time beneﬁting from deﬂationary input costs. As such, we see strong EBITDA and free cash ﬂow growth going forward. We also take comfort in REYN’s unique defensive traits, which should position the company to deliver consistent, albeit modest, growth through various economic cycles.”According to English, its dominant positioning in the market, more than 65% of sales come from categories that REYN is the top player in, suggests that it can maintain “relatively healthy” margins. Not to mention the company is particularly strong when it comes to private label goods, which could limit risk in times of duress for consumers.The analyst also argues that unlike other consumer staples names, REYN is tied to industrial commodities. “Thus in times of economic slowdown, we anticipate REYN’s input costs to decline, providing the opportunity for outsized EBITDA growth,” English noted.As for sales growth, English believes that “its recent distribution wins in the Home Improvement sector and its easy comparisons in 1H20” could drive organic sales growth of 0.8%-plus, up from -3.5%.It should come as no surprise, then, that English initiated coverage by placing a Buy rating on the stock. Should his $36 price target be met, shares could be in for a twelve-month gain of 28%. (To watch English’s track record, click here)What do other analysts think is in store for REYN? As it happens, out of 8 total analysts that have issued a recent review, 7 were bullish, making the consensus rating a Strong Buy. With an average price target of $35.63, the upside potential lands just slightly below English’s forecast at 26%. (See Reynolds stock analysis on TipRanks)PPD (PPD)Switching gears now, the last stock on our list is a contract research organization (CRO) that offers drug development, laboratory and lifecycle management services, serving names inhabiting the pharmaceutical, biotech, medical device, academic and government spaces.The company also had its first day of trading on February 6, pricing shares at $27 each. After raising $1.86 billion, it’s safe to say the Street has been thoroughly impressed.Goldman Sachs analyst Robert Jones argues that “PPD shares in our view represent an opportunity to buy a top-tier CRO with plenty of momentum against a healthy demand backdrop.” His bullish thesis is driven partly by the fact that PPD has been a key player in the CRO space for several years.On top of this, when you look at other CROs, Jones thinks that the company’s unique site and patient data strategy over the previous seven years has made it stand out. “As biopharma selection criteria of CROs moves further towards accelerating patient recruitment, we expect PPD’s AES capabilities to enable differentiation. In the RWE space, where expect more rapid industry growth, PPD has a leading franchise (Evidera), which screened as a top-2 player in our survey,” he said.Adding to the good news, the Goldman Sachs analyst sees the CRO industry as being “healthy” thanks to both the public and private funding of biotech over the past few years. With its industry-leading labs as well as the assumption that bookings growth will most likely increase, Jones also expects modest EBITDA margin expansion and debt reﬁnancing to spur double-digit EPS growth.Jones concluded by noting, “With solid bookings growth, a year of top-line acceleration in 2019 with further potential upside to numbers, and a path to signiﬁcant deleveraging, we see a core mid/large-cap exposure to an attractive end-market.” It makes sense, then, that the four-star analyst started off his PPD coverage by issuing a bullish call and setting a $34 price target. This conveys his confidence in PPD’s ability to surge 26% over the next twelve months. (To watch Jones’ track record, click here)In general, the rest of the Street is on the same page. With 12 Buys and a single hold received in the last three months, the word on the Street is that PPD is a Strong Buy. In addition, the $33.29 average price target brings the upside potential to 24%. (See PPD stock analysis on TipRanks)
Reynolds Consumer Products Inc. (NASDAQ: REYN) (the "Company"), announced today it will report results for the fourth quarter and fiscal year ended December 31, 2019 on Tuesday, March 10, 2020 before market open.
Reynolds Consumer Products (NASDAQ:REYN), the maker of Hefty trash bags and Reynolds Wrap aluminum foil, sold 47.2 million shares at $26 each on January 30 for proceeds of $1.2 billion. The first billion-dollar listing of 2020, it is the largest offering by a household goods company.Source: iStockphoto The company marketed its stock at a price range of $25 to $28 a share. On the first day of trading, Reynolds stock gained a respectable 9.8%, closing at $28.55. While it didn't quite meet the first-day open of 1Life Healthcare (NASDAQ:ONEM), an operator of primary care clinics in the U.S. which gained 58% in its trading debut, Reynolds did show that boring names can deliver the goods for investors.Reynolds products aren't sexy, but it believes it's got a compelling investment thesis.InvestorPlace - Stock Market News, Stock Advice & Trading Tips"What's attractive to investors about our company is steady proven growth over a long period of time," Reynolds Chief Executive Officer Lance Mitchell said in an interview. "We have a very consistent, durable demand and investment thesis that's compelling." * 7 Utility Stocks to Buy That Offer Juicy Dividends Here are seven reasons you shouldn't buy into the Reynolds IPO hype. Don't Buy The Hype: IPO Investors Got HosedSource: Shutterstock Reynolds, as I said in the intro, sold its shares to the public for $26 each. Based on 202.6 million shares outstanding after the IPO, it went public with a market cap of $5.3 billion. As I write this, it's trading above $30, an $800 million increase in its market cap in just three days of trading. That gives Reynolds an enterprise value of $8.5 billion on a pro forma basis.If you turn to page 51 of its prospectus, you will see that Graeme Hart, the company's owner and chief beneficiary of its IPO, contributed $77.2 million in equity to control 77% of the company post-IPO. For anyone that's counting, he paid 50 cents a share for his ownership stake.Meanwhile, IPO investors paid $1.2 billion or 26 cents a share for the remaining 23% of the company. That's quite a deal. Hart's $77.2 million investment is now worth $4.7 billion. How did he get to this point?Hart's private equity firm, Rank Group, acquired Reynolds from Alcoa (NYSE:AA) in December 2007 for $2.7 billion, much of the payment made with borrowed funds.In 2018, Hart said the following about his leveraged buyout strategy:"Be bold," Hart said in a speech at his alma mater in New Zealand. "That means buy as big as you can, borrow as much as you can and then work the asset as hard as you can."He did that at the expense of those buying IPO shares. It's Got a Ton of DebtSource: Photo from CreditRepairExpert Source: Shutterstock As I stated previously, a big chunk of the purchase from Alcoa was made with borrowed funds. Then, in 2010, Reynolds acquired Pactiv Corp., the maker of Hefty trash bags, for $4.4 billion and the assumption of $1.5 billion in debt. That was a significant acquisition for Reynolds because today, Hefty accounts for 46% of the company's overall revenue. Without it, Reynolds wouldn't have nearly as interesting a story to tell IPO investors. As the "Use of Proceeds" section states, Reynolds will use the net proceeds to pay down some of the $4.1 billion in debt it had before its IPO. It has arranged a new term loan facility of $2.475 billion, of which $2.45 billion of it will replace the old debt. It will also have a new $250 million revolving facility that is undrawn as of the IPO.The long and the short of it is that the company's long-term debt hasn't changed, but Hart and his related companies have gotten the funds they borrowed to buy and grow Reynolds repaid. * 7 Utility Stocks to Buy That Offer Juicy Dividends Again, remember that $77 million is all it took to build a company with an $8.5 billion enterprise value. Very Little GrowthSource: Shutterstock Source: Who is Danny / Shutterstock.com As CEO Mitchell stated in the interview I referenced in the introduction, Reynolds has a history of proven growth over a long period. For this reason, he believes Reynolds is a compelling investment.I see things a little differently. In 2014, Reynolds had sales of $2.72 billion. In 2018, it had annual sales of $2.81 billion. That's a compound annual growth of less than 1% in a period of reasonably healthy economic expansion. In my eyes, that's anemic growth, at best. The company's prospectus brags that of its four key areas of focus, two of them: Cost Reduction and Automation, have to do with cutting costs rather than growing the top line. Meanwhile, Reynolds' adjusted EBITDA grew from $523 million in 2014 to $647 million in 2018, a 5.5% CAGR. That, too, isn't what you would call hitting the leather off the ball.Sure, the company discusses paying out a quarterly dividend of 22 cents a share, but I suspect in 2-3 years, that will be the only thing attractive about REYN stock. Little Growth at a Reasonable PriceSource: Who is Danny / Shutterstock.com In the first nine months ended September 30, 2019, Reynold's adjusted EBITDA grew by 4.2% over the same period a year earlier, 130 basis points lower than its four-year average. I'll assume Reynolds' 5.5% growth rate stays intact for 2019. That works out to adjusted EBITDA of $674 million, which means its enterprise value of $8.5 billion is almost 13 times EBITDA.That's certainly not expensive when compared to other household products companies. However, the likelihood of the company's adjusted EBITDA growing at a pace that keeps up with its market cap and debt accumulation growth, suggests its valuation could get expensive in a hurry. Further, Reynolds' 2018 free cash flow was $448 million. If we assume it will be 10% higher in 2019, you get $493 million. Based on an $8.5 billion enterprise value, its free cash flow yield is 5.8%. That too isn't half bad. Again, just as in the case of adjusted EBITDA, it's likely not going to be increasing its free cash flow each year at the same pace as its market cap and debt accumulation, which means its free cash flow yield won't get more attractive in the years to come. This means you're buying REYN stock today for little growth at a reasonable price. Tomorrow, you'll be getting a low growth for a nosebleed valuation. * 7 Utility Stocks to Buy That Offer Juicy Dividends There are much better buys given the risk/reward profile. Innovation Can't Happen Fast EnoughOne of Reynolds' business strategies is to drive growth through new and innovative products. To that end, it says that 21% of its revenue in fiscal 2018 was from products that were less than three years old, exceeding its annual goal of 20%.Source: Shutterstock In the prospectus, it mentions several innovative products, including the Hefty Ultra Strong product line, which was named one of 2018's most innovative products, according to Nielsen. In fact, it mentions the words innovation or innovative 101 times in the prospectus. The problem is all companies push innovation these days. In its fourth-quarter conference call, Church & Dwight (NYSE:CHD) management mentioned these same words a total of 12 times. "We've really picked up the pace of innovation for vitamins. If you look at '17 and '18, we kind of averaged six new items a year, we had 22 new items in 2019, we got 17 more coming in 2020," stated Church & Dwight CEO Matthew Farrell. Reynolds sells aluminum foil, garbage bags, food and storage bags, party cups, etc. Innovation can be a good soundbyte, but there's not a whole lot of change the company can bring to the table. It's a Controlled CompanyAs I mentioned previously, New Zealand billionaire Graeme Hart owns 77% of Reynolds post-IPO (74% if the over-allotment is exercised). This means that Hart will be able to act in his own best interests rather than the company.Source: Shutterstock I realize that it doesn't make sense for someone to act against the best interests of a company they control because, ultimately, they might want to sell it. However, it happens more often than people realize. It's one thing to have a significant stake in a business, but when it's more than 50% of the outstanding shares, corporate governance often goes out the window.As an interesting aside, page 32 of the prospectus states that two subsidiaries of RGHL Group, which is owned by Graeme Hart, have defined benefit pension plans that are currently underfunded by $900 million. Should things go sideways with these pensions, Reynolds could find itself in the middle of a nasty lawsuit because it's a controlled company. * 7 Utility Stocks to Buy That Offer Juicy Dividends Now, the likelihood of this happening is remote, but it's something to consider when considering this slow-growth business, International Expansion Going Will Be ToughSource: Shutterstock Reynolds cooking and baking division generates a small amount of revenue outside the U.S. Here in Canada, where I live, it owns the Alcan brand of aluminum foil. It's very popular at Costco (NASDAQ:COST). Outside North America, it has the Diamond brand. In total, the company sells its wares in 54 different countries. However, it is the U.S. and Canada that account for 99% of its sales. It estimates that its addressable market outside North America is $7.2 billion. Based on $2.98 billion in 2018 annual sales, its international revenues were $298 million or just 4% of its estimated addressable market. While this seems like an obvious area of expansion for the company, it's important to remember that it participates in product categories that aren't exactly cutting edge or new to the world. Established brands outside North America aren't going to give up market share just because it says Reynolds or Hefty on the box. Whatever profitability Reynolds currently enjoys could partly disappear if it were to up spending outside North America. Therefore, I believe investors must view this opportunity as a double-edged sword. Be careful what you wish for because you just might get it. At the time of this writing Will Ashworth did not hold a position in any of the aforementioned securities. More From InvestorPlace * 2 Toxic Pot Stocks You Should Avoid * 7 Utility Stocks to Buy That Offer Juicy Dividends * 10 Gold and Silver Stocks to Profit Off 2020's Fear Trade * 3 Top Companies That Should Be More Careful With Your Data The post 7 Reasons Not to Buy Into the Hype Over Reynolds IPO appeared first on InvestorPlace.