Question:
I’ve held Bemis Company for a little over a year now. I was looking to make a change to Berry Plastics Group. I think the smaller company can grow further. Do you agree?
Answer:
Both Bemis Company (NYSE: BMS) and Berry Plastics Group (NYSE: BERY) manufacture various plastic products, such as containers, lids, drink cups, and trash bags.
If you believe in the law of large numbers, size does usually matter for growth, meaning it’s difficult for a large company to maintain rapid growth because eventually it will outgrow the market. That said, we do not believe either of these companies is in danger of that since their market caps are $4 billion and $3 billion, with Bemis being the larger of the two. If you believe Wall Street’s expectations, Berry Plastics is expected to grow its earnings by about 13%, versus about 6% for Bemis. So yes, Berry is expected to grow faster.
However, you will pay a premium for that expected growth, with Berry trading at about 25 times earnings, whereas Bemis trades about 17 times earnings. Bemis also has a dividend yield of nearly 3% and has better, or at least equivalent, margins and returns on assets and capital.
All things considered, we suggest you continue to hold Bemis and stay the course.
Question:
I’ve held Public Storage since about 2010. I’d like to invest some profits elsewhere. Should I keep some Public Storage or sell out? What else do you like in that space?
Answer:
You are likely fortunate and have probably seen a very nice rise in your investment. We have liked Public Storage (NYSE: PSA) for a long time. When the housing market faltered and foreclosures were rising, people needed a place to store all of the furniture they had purchased to fill their McMansions. Public Storage stood ready to benefit from others’ misery.
While we’ve seen the real estate market begin to recover, Public Storage is still seeing healthy occupancy rates of nearly 95%, and revenue per square foot is up about 6% in the last year alone. The company also recently raised its dividend by 12% and now yields more than 3%.
We believe you should do well keeping Public Storage.
Question:
I’m trying to get my kids to take an interest in investing. We’re looking at “sports” related stocks. What do you think of Manchester United and World Wrestling Entertainment?
Answer:
While we commend your efforts to get your children interested in investing, neither Manchester United plc (NYSE: MANU) nor World Wrestling Entertainment, Inc. (NYSE: WWE) meet our criteria for investment.
Manchester United is a soccer club based in England that has been publicly-traded for less than two years. In that time, the company has lost money in three of eight quarters.
As far as the WWE, we give Vince McMahon credit for shaking up the cable industry by starting his own channel that will offer older classics like “Wrestlemania” in addition to new monthly pay-per-view events. The market greeted the announcement very warmly, sending the shares about 80% higher year-to-date and over 250% in the last 12 months. However, after having seen earnings fall about 25% annually for five years, WWE shares now trade about 300 times earnings.
We do not recommend either stock. If your children are interested in sports, and you want to get them interested in investing, you may consider companies like Nike, Inc. (NYSE: NKE), Under Armor Inc. (NYSE: UA), or The Walt Disney Company (NYSE: DIS), which owns the ESPN network.
At Henssler Financial we believe you should Live Ready, and that includes understanding which stocks make solid long-term investments. If you have questions regarding your holdings, the experts at Henssler Financial will be glad to help. You may call us at 770-429-9166 or email at experts@henssler.com.
Disclosures
This article is meant to provide valuable background information on particular investments, NOT a recommendation to buy. The investments referenced within this article may currently be traded by Henssler Financial. All material presented is compiled from sources believed to be reliable and current, but accuracy cannot be guaranteed. The contents are intended for general information purposes only. Information provided should not be the sole basis in making any decisions and is not intended to replace the advice of a qualified professional, such as a tax consultant, insurance adviser or attorney. Although this material is designed to provide accurate and authoritative information with respect to the subject matter, it may not apply in all situations. Readers are urged to consult with their adviser concerning specific situations and questions. This is not to be construed as an offer to buy or sell any financial instruments. It is not our intention to state, indicate or imply in any manner that current or past results are indicative of future profitability or expectations. As with all investments, there are associated inherent risks. Please obtain and review all financial material carefully before investing. Henssler is not licensed to offer or sell insurance products, and this overview is not to be construed as an offer to purchase any insurance products.
