Summary
The firm has strong fundamentals and a responsible amount of debt.
The firm has an interesting long-term strategy of purchasing out-of-favor grocery store food brands and revamping them.
The stock offers an attractive 6% dividend yield.
Investment Thesis
B&G Foods Inc. (BGS) presents in one of my preferred investment situations. As always, B&G Foods is a financially sound business which is the minimum requirement for any investment I make. The next two factors combine with the first. B&G Foods offers an attractive dividend yield and is priced at a discount.
It also seems that B&G Foods is executing a clever and profitable long-term strategy for growth. It was explicitly stated that B&G Foods sought to grow through acquisition and organic growth. Typically, I am very skeptical of a plan that is focused around growing through acquisition. However, I believe B&G Foods is going about this in a very intelligent manner. What they are doing is they are acquiring long standing, and almost outdated brands, that still have a lot of name recognition. Then B&G Foods appears to be developing new products and breathing new life into the brand. I first noticed this on the cover of their 2017 Annual Report. All of the listed brands, Green Giant, Ortega, Spice Islands, Cream of Wheat, Mrs. Dash, Pirates Booty, I had already heard of and was familiar with. They all had left the same impression in my mind of being old and mediocre. In fact, deeper in the 2017 Annual Report it states how old the brands are that are owned by B&G Foods, some of the brands originated back in the mid 1800s. One seemed as though it may have been founded before the civil war. This is what was compelling about the strategy.
