Thursday, July 13, 2017

Recent Buy, July 2017

Farmer's Tan Gremlin here.  I don't know about you, but I sunburn like crazy - so save yourself the experience of awesomely itchy skin and use sunblock lotion.  Anyways, summer is very busy.  We are buying a house, getting sunburned by the pool, going tubing, going to a wedding, etc.  One of the things I have been trying to do a lot is to ride my bike where I can.  Its cheaper and more enjoyable than driving.  However, I sweat like a maniac - so if I am riding I either need a shower when I get to where I am going, or to keep about 10 feet away from everyone else who has a good sense of smell at all times.  Enough, with how much I sweat and what I am doing this summer, what did I just buy?

Yesterday, I added a new position by purchasing shares of J.M. Smucker Co. (SJM) in my Roth IRA account.  I bought 11 shares, with a total cost of $1281.85 ($115.90 / share, including commission).  The current yield is 2.62%.    The P/E ratio for SJM sits today at approximately 22.44, trailing and 14x forward earnings.  These are both better than the historical 5 year average for the stock with the average yield being 2.19% and the average P/E being just under 24 (with a high of 41!).  SJM boasts a trailing payout ratio of 57% and a forward payout ratio of approximately 35% (looking at the data from multiple sites...).  SJM has 19 years of dividend growth and is a member of the Dividend Contenders.  This purchase will add $33.00 to my 12-month forward income.

SJM is a consumer staple stock, and that sector is finally entering good buying territory (thanks to one Amazon, which one day will find itself on the wrong side of anti-trust litigation I would think).  It is nice to get a security that is approaching 5 year highs in terms of yield.  On a macro level, it has been nine years since a recession so the likelihood of having one is increasing.  When it does hit, people will continue to buy the staples.  Perhaps even buy the cheaper items.  No fancy food, but stuff they can afford to put on the table all week.  This is where companies like SJM come in; they have been buying healthier brands and securing space in that market and they still have the old guard value brands.  Not to mention to mention that many store brands are made by large companies like SJM.

This is a company and a sector I am very confident will still be around decades from now.  The fact is, people need to eat and there are now more people than ever.

I will update my portfolio page at the end of the month.  Stronger 2017!

What do you think of SJM? 

- Gremlin
- Long SJM


  1. Thanks for sharing that recent pick up. I don't hold SJM but have been reading more and more about it online as its stock price has been faltering. It looks fairly valued at current levels and I think will make a great long term hold. As you already know, the food staples have been hurting this year. SJM is in good company with HRL, GIS and others lagging.

    1. DHut,

      Thanks for the comment. I agree, all of those food staples have been lagging and it is good timing for that - it has been almost 9 years since a recession, it would be unusual to continue watching a bull trample forward in this way. When that bear does come, it will be time to do even more damage!

      - Gremlin