Pat McKeough responds to many personal questions on specific stocks and other investing topics from the members of his Inner Circle. Every week, his comments and recommendations on a selection of the most intriguing questions of the past week go out to all Inner Circle members. And every Friday, we offer you one of the highlights from these Q&A sessions.
This week an Inner Circle, one question on stock market investments concerned a company that executed a major spinoff this past autumn, changing its name and turning its focus toward premium spirits.
Q: Hi Pat: Can you give your opinion on Beam Inc.? It has a lot of good brands. Looking forward to your comments.
A: Beam Inc., (symbol BEAM on New York; www.beamglobal.com), is the successor to consumer conglomerate Fortune Brands, Inc. following the spinoff of that company’s home and security business in October 2011.
Fortune Brands shareholders received one share of Fortune Brands Home & Security (New York symbol FBHS) for each Fortune Brands share they held. In addition, Fortune Brands sold its Acushnet golf business (maker of the Titleist and Footjoy brands) to a group led by Fila Korea, Ltd. and Mirae Private Equity.
Fortune Brands then changed its name to Beam Inc. The company now mainly produces and distributes spirits. It is the world’s fourth-largest premium spirits company and the biggest in the U.S. Its brands include Jim Beam and Maker’s Mark (bourbon), Courvoisier cognac, Canadian Club whisky, Teacher’s Scotch Whisky, DeKuyper Cordials, Sauza tequila and Skinnygirl cocktails.
As a member of my Inner Circle, you will get individual answers to your personal investment questions. And you will see my answers to questions other investors like you are asking. In fact, you will get virtually all the investment advice I have to give. You will have access to all of our advisories – The Successful Investor, Wall Street Stock Forecaster, Stock Pickers Digest and Canadian Wealth Advisor – and full access to the members-only, password-protected Inner Circle section of The Successful Investor Network website.
Although my team carefully researches all the stocks that members ask about, I personally review each and every recommendation. To ensure this close personal attention, only a limited number of members can be admitted to our Inner Circle. Under the pressure of world events, even more investors are asking for my personal investment advice. We are nearing our membership limit already. Click here to secure your membership in the Inner Circle right away.
Stock market investments: Reality-TV star creates fast-growing brand of cocktails for women
The company has recently added to its product lineup by purchasing a number of other brands. In particular, in March 2011 it paid $120 million for Skinnygirl spirits, created by reality-TV star Bethenny Frankel.
Skinnygirl is best known for the Skinnygirl Margarita, a ready-to-drink product with 100 calories per serving, lower than typical margarita-style cocktails. Beam has since made Skinnygirl available in 70% more locations. That has helped the drink become one of the fastest-growing spirit brands in the U.S.
Skinnygirl is mostly aimed at women, who are a growing segment of the premium-liquor market. The company is now making more drinks for women, including the recently introduced Red Stag by Jim Beam, a black cherry-infused bourbon whisky.
Beam shares trade at 24.4 times the company’s likely 2011 earnings of $2.11 per share, and 22.1 times this year’s forecast earnings of $2.33 a share. The stock yields 1.5%.
In the Inner Circle Q&A, Pat looks at whether the company can keep growing in international markets. He also considers the possibility of a takeover bid by one of the larger global spirits firms. He sums up with his clear buy-hold-sell advice.
Inner Circle members see Pat’s analysis and recommendations on the stocks other members have asked about in each week’s Inner Circle Q&A. You can view it immediately when you become a member of this special investment group. You will get Pat McKeough’s answers to your personal investment questions, full access to our members-only Inner Circle website, and many other membership privileges. Click here to get started right away.
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