This Is a Great Buy for this Market

 | Oct 01, 2012 | 11:35 AM EDT
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You want something to buy here? How about taking part in the 3.63 million share offering by B&G Foods (BGS)?

Here's a little company that has been one of the biggest wins I have seen in the last few years, a company that, time and again, buys old-line, sleepy brands and revitalizes them.

CEO David Wenner has accumulated a terrific portfolio of quiet entries, brands like Vermont Maid, Cream of Wheat, Regina salad dressing, Ortega and Las Palmas Mexican foods, B&M baked beans, Polaner jams and, of course, the namesake  B&G pickles. Recently, he expanded into household products, buying castoffs ScotchGuard and Static Guard as well as Mrs. Dash, Sugar Twin and Molly McButter as some other shelf-takers, from Unilever. These little brands didn't move the needle for a giant like Unilever. But they do remarkable things for the bottom line of B&G.

Then last month Wenner struck again, buying New York Style and Old London from an outfit called Chipita America for $62.5 million in cash. You may not know those names, but their brands are quintessential American staples (Bagel Crisps and Panetini Toast, something I had this very morning, as well as Melba Toast and JJ Flats). If you go to the supermarket, right after the bread aisle, there's almost always a couple of rows of packaged bread goods and with this acquisition B&G now has a major toehold in the growing healthier snack category. Once B&G's in, it does profitable line extensions and very quickly monetizes its buys. This time will be no different. 

Wenner likes to strike quickly with cash deals and then follows up with equity offerings, like this one announced today, that lower the debt levels these acquisitions engender. It is a terrific and winning formula that that he has done again and again, taking the stock from $2 and change in 2008 to $30 now.

Meanwhile, the company pays an above average dividend, right now 3.5%, and has consistently delivered on earnings. The comparisons are getting easier as prices increases kick in, while sales stay steady. More dividend boosts could be ahead. Wenner's a large shareholder and he doesn't make acquisitions idly. He has never overpaid for anything. 

To me, this is a great opportunity to take some stock down at a discount. You don't get much of one usually and when you do, you have to take advantage of it and buy. I would call my broker and get in on this 3.65 million share deal. The company will be stronger after it, be ready for the next deal and continue its pattern of under-the-radar growth.

That is exactly what you want in this rising market.

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we will add this here to cheaply protect our downside a bit BOUGHT SPY SEP 244 PUT AT 2.70 ...



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