This post is part of a special annual report -- Top Stock Picks '09 -- in which TheStockAdvisors.com asked 75 leading newsletter advisors to select their favorite investment for the new year.
"To paraphrase its marketing slogan: 'Nobody shouldn't like Sara Lee (NYSE: SLE),'" says Steve Ralston, consumer products sector expert at Zacks Investment Research.
"From the sales of staple products, consumer non-durable companies generate solid cash flow, with which management can enhance shareholder value through share repurchases and dividend increases.
"Recently restructured consumer non-durable companies are especially attractive, particularly if they are well-managed, trade at a single-digit P/E, and yield more than 4%.
"My favorite stock for 2009 is Sara Lee. Sara Lee announced a 5-year restructuring plan (the Transformation Plan) 3-1/2 years ago. The company has been right-sized, having divested unprofitable and low margin businesses.
"Operations that generated over 30% of the company's sales in 2004 have been divested. With most of the quarters of unfavorable comparisons behind it, Sara Lee is moving forward as a leaner, more efficient, and more integrated company.
"Sara Lee's management is now better focused on the company's well known brands in Bakery, Beverage, Meat, Body Care, Air Care, Insecticide, and Shoe Care product categories.
"The company has over 70 brands, including Kiwi shoe polish, Ball Park franks, Earthgrains bread, Jimmy Dean sausage, Senseo coffee, Ambi Pur air fresheners, and its namesake, Sara Lee bakery and meat products.
"In addition, Sara Lee is reducing costs through the Project Accelerate initiative, which is a series of global projects designed to reap annualized cost savings of $200 million to $250 million in the next 3 years.
"The company will outsource pieces of its transaction processing, information services, and global indirect procurement activities.
"Sara Lee is an attractive consumer non-durable company. At a price below $10 per share, the stock is very attractive with a single-digit P/E and a yield over 4%."
Steven Halpern's TheStockAdvisors.com offers a daily look at the latest market commentary and favorite stock picks and investment ideas from the nation's leading financial newsletter advisors.
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Reader Comments (Page 1 of 1)
1-08-2009 @ 8:55AM
Charlotte said...
There stock may be up and selling but they don't seem to care about there people. My husband retired about 13 years ago and lost everything except a $5,000 life Ins. policy and his monthly retirement check and thats nothing to brag about. EVERYTHING is gone, he draws the same amount monthly that he drew 13 years ago, no cost of living increase, no medical Ins. for him, NOTHING. Now you know why the CO's make so much money.
1-08-2009 @ 11:44AM
MJ said...
My husband bought the stock at $24
he is employed with Sara Lee. We sold
it last month and bought a ton of Ford
stock. I would beg to differ with this
guy. We lost $14 per share on Sara Lee.
Great deal.