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(B)(N) Givaudan SA & The Taste Of It All

February 16, 2014
Courtesy: M&M's

Courtesy: M&M’s

Deal Book. It’s no small matter that our M&Ms have just the right blue, and the right taste, and melt just so. But the industry that creates these wonders of taste and texture, and thousands more, is rather small and caters to a worldwide clientele of our best brands and also-rans.

They also spend about 8% of their sales revenue on research and development in the new alchemy, in contrast to their well-known customers who tend to spend 8% or more on advertising and marketing the taste of it all (Reuters, February 14, 2014, No appetite for big consumer goods? Try their suppliers).

Liquidity” is, of course, an issue for large investors in this $60 billion industry – not to worry, please see the chart below – and dividends are an issue for all investors despite the much-touted “growth” companies that aren’t growing as fast as their stocks. And, as in the case of luxury goods, the industry runs deep into skills and supplies of rare ingredients that are hunted, coddled or acquired by acquisition in surprise (ibid, Reuters). Please see Exhibit 1 for the fundamentals in good taste.

Exhibit 1: The Good Taste Companies – Fundamentals – February 2014

The Good Taste Companies - Fundamentals - February 2014

The Good Taste Companies – Fundamentals – February 2014

The Undervalued Good Taste Companies - February 2014

The Undervalued Good Taste Companies – February 2014

These six companies gained +35% and $15 billion last year; they also paid $809 million in dividends to the shareholders for an aggregate yield of 1.3% and 43% return of earnings; and they made 17% on the shareholders equity.

The Chart on the left asserts that these stocks are still “undervalued” because there is an excess of demand over supply and despite some turmoil in the stock market reflecting weak consumer demand for retail goods and emerging market anxiety (ibid, Reuters) wherein these companies also serve, the stocks are up $1.1 billion and +2% this year.

All but one (Tate & Lyle since January) are in the Perpetual Bond™ and that portfolio returned a remarkable +60% last year, plus dividends, and is up another +12% so far this year. Please see Exhibit 2 and 3 below for the details.

Exhibit 3: (B)(N) The Good Taste Companies – Prices & Portfolio – February 2014

The Good Taste Companies - Prices & Portfolio - February 2014

The Good Taste Companies – Prices & Portfolio – February 2014

Exhibit 4: (B)(N) The Good Taste Companies – Portfolio & Cash Flow Summary

The Good Taste Companies - Portfolio & Cash Flow Summary - February 2014

The Good Taste Companies – Portfolio & Cash Flow Summary – February 2014

(Please Click on the Chart to make it larger and again if required.)

Exhibit 4: (B)(N) GVDNY Givaudan SA ADR – Risk Price Chart

(B)(N) GVDNY Givaudan SA ADR

(B)(N) GVDNY Givaudan SA ADR

Givaudan SA is a Switzerland-based company engaged in the fragrance and flavor industry. The Company has two divisions: Flavor and Fragrance.

(Please Click on the Chart to make it larger if required.)

From the Company: Givaudan SA, together with its subsidiaries, engages in the manufacture and sale of fragrance and flavor products to the food, beverage, consumer goods, and fragrance companies. The company operates in two divisions, Flavours and Fragrances. The Flavours division offers a range of flavors for use in beverages, savory, snacks, sweet goods, dairy products, food service, and health and wellness products. This division markets its products under the TasteEssentials, TasteSolutions, ByNature, and PureDelivery brands. The Fragrances division provides fragrance ingredients; fine fragrances; and fragrances for use in fabric and personal care, household and air care, skin and hair care, and oral care products. The company operates in Switzerland, Europe, Africa, the Middle-East, North America, Latin America, and the Asia Pacific. Givaudan SA was founded in 1796, has 9,300 employees and is headquartered in Vernier, Switzerland.

For more information on the chart elements and additional references to the theory, please see our Post, The RiskWerk Company Glossary.

And for more on what risk averse investing has done for us this year, please see our recent Posts on The S&P TSX “Hangdog” Market or The Wall Street Put or specialty markets such as The Dow Transports & Utilities or (B)(N) The Woods Are Burning, or for the real class actionLa Dolce Vita – Let’s Do Prada! and It’s For You, Dear on the smartphone business.

And for more stocks at high prices, The World’s Most Talked About Stocks or Earnings Don’t Matter – NASDAQ 100. And for more on what’s Working in AmericaBig OilShopping in America or Banking in America, to name just a few.

Postscript

We are The RiskWerk Company and care not a jot for mutual funds, hedge funds, “alternative investments”, the “risk/reward equation” and every other unprovable artifact of investment lore. We have just one product

The Perpetual Bond
Alpha-smart with 100% Capital Safety and 100% Liquidity
Guaranteed
With No Fees and No Loads on Capital

For more information on RiskWerk, please follow the Tags or Categories attached to this Letter or simply enter Search for additional references to any term that we have used. Related data may be obtained from us for free in a machine readable format by request to RiskWerk@gmail.com.

Disclaimer

Investing in the bond and stock markets has become a highly regulated and litigious industry but despite that, there remains only one effective rule and that is caveat emptor or “buyer beware”. Nothing that we say should be construed by any person as advice or a recommendation to buy, sell, hold or avoid the common stock or bonds of any public company at any time for any purpose. That is the law and we fully support and respect that law and regulation in every jurisdiction without exception and without qualification to the best of our knowledge and ability. We can only tell you what we do and why we do it or have done it and we know nothing at all about the future or the future of stock prices of any company nor why they are what they are, now. The author retains all copyrights to his works in this blog and on this website. The Perpetual Bond®™ is a registered trademark and patented technology of The RiskWerk Company and RiskWerk Limited (“Company”) . The Canada Pension Bond®™ and The Medina Bond®™ are registered trademarks or trademarks of the Company as are the words and phrases “Alpha-smart”, “100% Capital Safety”, “100% Liquidity”, ”price of risk”, “risk price”, and the symbols “(B)”, “(N)” and N*.

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