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The Recently Recommended Monthly Stock Special
Recently Recommended

The recently recommended company is *Bemis (BMS)

Comparison BMS (recently recommended stock of the month) vs SP500 (by Vanguard SP500 Index Fund) in the last 10 years.

Company Information:

Headquartered in Neenah, Wisconsin, Bemis Company, Inc. (BMS) is a global manufacturer of flexible packaging products (ranging from self-venting cook-in-bag packaging and retort packaging for shelf-stable products, to vacuum packaging for meat products and puncture-resistant, sterile medical packaging) and pressure-sensitive materials. Its divisions are located in 12 countries and its films for packaging products and adhesive materials are distributed worldwide. Its current total market capitalization of $4.4 billion makes BMS a mid-capitalization stock (a mid-cap stock has a market capitalization between $2 billion and $10 billion) and it is considered a solid and well-diversified business with a durable competitive advantage over rivals.

 

The company also enjoys solid management and corporate culture. According to Yahoo! Finance, consensus estimates call for the company to earn about $2.79 per share this year, up from $2.39 per share last year, and to go to about $3.00 per share next year. Bemis has paid dividends to investors since 1922 and has increased its payments for 20 consecutive years. During the past five years has increased its dividends at an average rate of 3.6%, and its quarterly payment of $0.31 per share currently provides a yield of 2.54%.

 

The value of dividends reinvestment: A hypothetical investment in Bemis Company has grown cumulatively (including dividends reinvested) 16,231.52% during the past forty years. The same investment has grown only 7,020.79% in the same period of time, excluding dividends. During the same period, a hypothetical investment in the S&P 500® index (thru the Vanguard 500 Index Fund (VFINX) has grown cumulatively (including dividends reinvested) 8,379.72%. Its current Price to Earnings ratio (P/E --a measure of valuation) of 14.7 is 12.3% below the S&P 500® index, and its Price to Sales ratio (P/Sales) of 1.2 is 40.8% below the index. According to Morningstar, the stock is trading 17% below its Fair Value Estimate, making it attractive for investors with a long-term investment horizon.

 

Technically (from the chart’s perspective) BMS also looks attractive, trading 9.4% below its all-time high and 7.3% below its 52 weeks high, while it is forming a long base between $40 and $54, in which $40 is acting as a strong technical support level. The actively managed no-load mutual funds American Century Equity Income Inv (TWEIX) and Mairs & Power Growth Inv (MPGFX) are major shareholders of BMS, holding 2.09% and 1.89% of its shares respectively. The stock is also one of the 63 holdings of the mutual fund managed by Moneypaper Advisors, the MP 63 Fund (DRIPX). BMS’ main competitors are Sealed Air Corp (SEE) and Sonoco Products Co (SON). BMS’ Beta (a measure of the volatility, or systematic risk in comparison to the market as a whole as evidenced by the S&P 500® Index) is 0.54, so the stock is 46% less volatile than the Market.

 

Best and worst years during the past 40 years: Its best year was 1985, in which BMS returned, excluding dividends, 69.2%. On the flip side, its worst year was 2007, when the stock declined 19.4% excluding dividends. Bemis dividend reinvestment plan charges no fees for cash investing, dividend reinvestment, safekeeping, automatic investment or termination of the plan. With the stock being fundamental and technically attractive, this company is an appropriate holding for investors who wish to build a holding over the long term.

 

Disclosure: Mario Medina has no position in Bemis Co Inc., and has no plans to initiate any position in the immediate future. However, the author is the co-manager of the MP 63 Fund (DRIPX), which does hold a position in the company. The author wrote the article himself and it expresses his own opinions. The author has no business relationship with BMS and this article is not intended as a recommendation to invest as the information published does not take into account any subscriber's personal finances, goals or risk tolerance. Accordingly, you should be aware of all the risks associated with any financial investment and should consult an independent financial advisor for any personal investment advice.

 

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