Tupperware: Keeping Your Growth Opportunities Fresh
Andrés is a member of The Motley Fool Blog Network -- entries represent the personal opinion of the blogger and are not formally edited.
Growth opportunities can be found everywhere, not only among highly innovative technology stocks. Companies like Tupperware (NYSE: TUP) are not usually considered high growth stocks, but investors could be pleasantly surprised by analyzing the growth trends for this traditional business all over the planet, especially in emerging markets.
There is nothing very different it Tupperware´s current business model in comparison to what the company used to do more than fifty years ago in the U.S. Basically it´s still a direct sales business that sells kitchen products under the strongly recognized Tupperware brand; the company has successfully added some beauty products to its product portfolio, and that shows the strength of a business model that leaves ample room for growth by adding new products to an established distribution network.
However its most exciting growth driver is not product innovation, but Tupperware´s exposure to the rapidly growing emerging markets economies. Many countries in Asia and Latin America are showing the same fundamentals that fueled the company´s expansion through all the United States during the sixties and the seventies, namely: a very dynamic economy with many women looking for flexible alternatives to enter the workforce while at the same time maintaining some independence and a flexible time schedule.
Although sales in the U.S. are not showing any exciting perspectives over the last years, Asia Pacific brought a 22% increase in sales for 2011 versus 2012 while the Latin American region generated an outstanding 50% jump in revenue for the same period. Even in Europe sales of Tupperware were benefited by dire economic conditions as more people turned to the company looking for job opportunities in a hostile labor market, and Tupperware was also helped by a renewed focus on eating at home and saving food by European consumers.
As we can see in the charts, both revenue and net income are showing some strong trends over the middle term, including the extremely deep global recession of 2008/2009.
Shares of Tupperware are trading at a forward P/E below 11 times next year's average earnings estimate, and the stock pays a 2.3% dividend yield, so valuation is not excessive at all, especially considering growth opportunities over the middle term.
Many investors would jump at the opportunity of buying a company like Tupperware back in the sixties, when it was a high growth company expanding rapidly in the US. Unfortunately It´s not possible to travel back in time, but the company is growing very strongly in countries like Brazil and Thailand right now, supported by economic fundamentals and a solid business model. Maybe history will provide a second chance to capitalize on Tupperware´s growth prospects.
The Motley Fool owns shares of Tupperware Brands. acardenal has no positions in the stocks mentioned above. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.