Investing in Ketchup

Investing in Ketchup

By www.profitableinvestingtips.com

As a recipe for success
in a slowly growing
economy, a consortium
including Berkshire
Hathaway has decided
that investing ketchup is
the way to go.

http://www.profitableinvestingtips.com/investing-trading/investing-in-ketchup

An investment group
that includes Berkshire
Hathaway is putting up


$28 Billion for a buyout
offer for H. J. Heinz
Company, the venerable
maker of ketchup.


As the offer stands
Heinz shareholders
stand to get $72.50 a
share for a stock that
was selling for $60 a
share last week.


Heinz has been around
for over a century and
makes Smart Ones
frozen foods,


Ore-Ida potatoes, and
Classico spaghetti
sauces in addition to
Heinz ketchup.


The company is
headquartered in
Pittsburgh, Pennsylvania
.


. It has manufacturing
operations on six
contents and produces
thousands of different
food products.


According Heinz, over
150 of its brands rank
first or second in their
class across the globe.


The company sells over
half of the ketchup
consumed in the USA
and over half of the
frozen potatoes.


The company is a cash
cow and has been
expanding into overseas
markets which now
make up nearly a
quarter of sales.


Fundamental analysis of
Heinz tells us that the
company delivers a
greater than 40%
return on equity.


Investing in
Consumer Stocks and
Cash Cows


It is highly unlikely that
half of the American
public will suddenly
decide to buy different
ketchup or frozen
potatoes.


Thus Heinz seems
assured to continue its
domination of these
food sectors.


This is a company that
sells things the people
will continue to buy
during bad as well as
good times.


It routinely delivers a
profit and, yawn, a
dividend.


Consumer
stocks, dividend
stocks, stocks that
essentially own their
market are great long
term investments.


Investing in ketchup, so
to speak, is sound
investing.


Berkshire Hathaway and
their partners in the
buyout of Heinz seem to
think so too.


What Else Do People
Like?


Some time back we
wrote about investing in
beer. As we said then,


Whether you drink beer
or not, investing in beer
can be quite profitable.


In looking at the
different types of stock
that do well during
recessions and profit
during recoveries large
brewers typically are on
the list.


Whether your beer of
choice is made by
Anheuser-Busch or
Inbev,


Molson Coors or
Carlsberg these
companies have the
capacity to make money
year in and year out.


There also have been a
series of mergers and
acquisitions in the
brewing business over
the years making for
some interesting
investments.


Picking new winners
with new comers to the
business as well as each
reshuffling of the
international brewing
business can be
profitable when
investing in beer.


Investing in Ketchup


The investing issues for
consumer products
companies that
routinely return a profit
are twofold.


First of all these are
stocks with a high
margin of safety and
continual money
makers.


Second, the prices of
these stocks are
commonly reflective of
the stability of the
company and the
constant cash flow.


As such these
companies tend to sell
at low PE ratios.


When there is a
buyout, as with
Heinz, there is a nice
bonus to be earned in
return for giving up the
stock.


Investing ketchup, beer,
and other stable
businesses is typically
for the long run.


Investing in Ketchup

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Investing in Ketchup