91ÊÓƵ

Dear Mr. Berko: Your buy, sell or hold thoughts on B&G Foods and why. Do directors of public corporations earn their pay?

N.L.

Jonesboro, Arkansas

Dear N.L.: Cream of Wheat is one of my favorite morning foods, and so is McCann’s Irish Oatmeal when I toss a fistful of raisins into the bowl. B&G is a $1.6 billion company that makes, sells and distributes some 50 shelf-stable products, including frozen and canned vegetables, meats, beans, salsas, syrups, dressings and the like.

Thank you, B&G Foods (BGS-$22), for products by Polaner, Green Giant, SnackWell’s, Mrs. Dash, Accent, Durkee, LeSueur and myriad others that have earned a spot in our kitchen during the past 50 years of the company’s 120. And thanks to the wholesalers, supermarkets, mass merchants and warehouse clubs for bringing these products to us, including puffed corn, dry soups, rice snacks, nut clusters, hot sauces, maple syrups and delightful pizza crusts.

I like this company intensely, even though it missed consensus by 4 percent last quarter. I like its dividend, which has increased yearly from $0.55 in 2008 to $1.90 this year. And I like the 8.5 percent yield. I like the fact that B&G has increased earnings in 11 out of its last 13 years. There was a slight dip in revenues last year as B&G sold its Pirate Brands to Hershey for $420 million.

I like B&G because net profit margins, according to several investment services, continue to improve and are projected to exceed 10.5 percent in the coming few years. Morningstar thinks the trading price is a bit too high, S&P is neutral, and Credit Suisse rates B&G as underperform. On the other hand, Seeking Alpha, Zacks, Blackrock, Vanguard and Principal are significant shareholders, believing B&G will nicely increase its revenues for 2020 through 2023. In the past three months, insiders purchased 102,000 shares and sold 13,000 shares.

I think B&G is a fairly good long-term investment. Short-term price action may be wobbly and nothing to write home about. This mid-cap issue traded in the mid-$50s back in 2016 when the dividend was $1.73, revenues were $1.4 billion and net profit margin was 9.4 percent. Value Line’s Kenneth Nugent believes B&G can be a $70 stock by 2023-2024. B&G officers and directors agree: The president bought 44,000 shares, the executive vice president and chief operating officer bought 33,000 this year, and even the general counsel bought 10,000.

If you want to buy 300 shares as a long-term investment, I’ll put my imprimatur on it. B&G could be a slow winner, and while you’re waiting a few years for potential capital gains, you’ll be pleased as a pasha with a nice quarterly dividend that should be reinvested. Despite the drop in value to $21 in the past year, many observers believe that in the coming two to three years B&G will make a positive contribution to your total wealth.

Being a director of a group of mutual funds or a public corporation is a sinecure that usually is handed out to lucky old dodos and friends in the industry as a reward for service. They’re paid exceptionally well – often $200,000 annually (per board position) plus perks, travel costs and per diems while attending meetings. Many of these old guys are on six to 10 boards and never worry about earning a living for the remainder of their lives.

Most directors are useless window dressing. Did the boards of GE, JCPenney, Macy’s, Theranos, Sears and many others keep their companies solvent? I wouldn’t waste a vote on those coiffed meatheads wearing $3,000 suits.

Address your financial questions to Malcolm Berko, c/o The Daily Journal of Commerce, P.O. Box 8303, Largo, FL 33775, or email him at [email protected]. © 2019 Andrews McMeel Syndication