This Kitchen Battle Ends Now
Matthew is a member of The Motley Fool Blog Network -- entries represent the personal opinion of the blogger and are not formally edited.
It seems that every night after dinner my wife fights the same battle of finding the lid that goes to the container she just filled with our dinner leftovers. What I’d really like to know is why we have a drawer full of lids and not one ever fits. Maybe it is because most of the storage containers we own were not originally purchased for that purpose but came filled with something store bought. While I am seeking out the best storage product I thought I’d see if there might be an investment opportunity hiding in the cabinets as well.
When thinking about storage products (and honestly, who does that?) the first company that came to my mind was Tupperware Brands (NYSE: TUP). Known for their iconic Tupperware parties and direct selling approach, the company reminds me a lot of Avon Products (NYSE: AVP) in more ways than one. Not only does the company make a host of products that could easily do the trick for our kitchen dilemma, but twenty six percent of their sales come from beauty and personal care products. Unlike Avon, they are actually growing earnings and revenue quite nicely. Much of this is due to their focus on emerging markets which made up 59% of 2011 sales. These markets play well to Tupperware’s direct selling strengths as they have a rising middle class and a limited retail infrastructure. This has helped Tupperware grow earnings an average of seventeen percent the past five years with earnings projected to grow a further twelve percent in each of the next two years. With shares trading at about sixteen times earnings they are reasonably priced, however, a look at their website tells me that their products were not, at least those designed to be sold to Americans. I think I'll pass on Tupperware's products, but I think a deeper look as an emerging market story might pay some dividends.
The other company that came to mind when considering an upgrade of our kitchen storage products was Newell Rubbermaid (NYSE: NWL). Their Rubbermaid product line has the no brainer “Easy Find Lids” which not only feature nesting containers, but are also dishwasher safe which sounds like a win-win for me. Not only that, but when comparing their prices to those of Tupperware seem to be a much better value. Taking off my consumer focus and turning my eyes to the business and I can see that the company has been going through a major portfolio repositioning the past few years. In 2005 they had twenty-four business units in five separate business segments but by 2009 they slimmed this down to just thirteen units in three business segments. While sales went from $6.3 billion down to $5.6 billion, gross margins rose from 29.9% up to 36.7% as they shifted their focus to their most profitable brands. They are working toward getting that gross margin up to 40% over the next few years. Those improvements are beginning to pay off as earnings are starting to grow and by the end of next year they are estimated to earn $1.83 a share giving them a forward price to earnings multiple of just ten times. I must say I am intrigued by both the company and the products, I think more research on both is certainly something worth pursuing.
The final company that I came across in my riveting research of plastics purveyors was Glad which is jointly owned by Clorox (NYSE: CLX) who owns eighty percent and Proctor & Gamble (NYSE: PG) who own the other twenty percent. One quick look at their website and I knew I had found the offending party in our nightly game lid matching. Any container in our cabinets that didn’t originally come filled with lunch meat or dairy related products just happened to be made by Glad. Now, don’t get me wrong, they certainly get the job done, that is of course when we find a lid that matched, but I swear those lids either shrink or some gremlin replaces them with the wrong size. As far as investment opportunities, I think P&G is a great core holding for any retirement portfolio. Clorox isn’t quite as diversified but is growing a bit faster. Neither is known for their kitchen wares so it would be tough to begin to build an investment case for or against based on one jointly owned product line.
While my anniversary is fast approaching, kitchen storage containers are not even on the radar of course. For research purposes, however, I think that some "Easy Find Lids" deserve a place in our cabinets and am intrigued enough to do real research to see if Newell Rubbermaid deserves a spot in my portfolio as well. However, I'd like to hear from you, have you found a way to end your own battle for kitchen sanity?
latimerburned has a Diagonal Call on the The Procter & Gamble Company. The Motley Fool owns shares of The Clorox Company and Tupperware Brands. Motley Fool newsletter services recommend The Procter & Gamble Company. 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.If you have questions about this post or the Fool’s blog network, click here for information.