Tuesday, April 2, 2013

Investopedia: McCormick Continues To Defy Gravity

When I last wrote on McCormick (NYSE:MKC) in October of 2012, I liked almost everything about the company except the valuation on the stock. However, as I've mentioned repeatedly in the past, valuation is no impediment to further appreciation in the short term and McCormick shares have climbed a further 15% from that point (beating the market by more than 7% over that time).

Accordingly, the story on McCormick largely remains the same. While some investors will argue that the valuation of Berkshire Hathaway's (NYSE:BRK.A) and 3G Capital's deal for Heinz (NYSE:HNZ) “proves” that packaged food stocks are undervalued, I don't share that sentiment. The strong volume growth at McCormick is certainly positive, and I like both the company's commanding U.S. share and growth prospects, but today's share price suggests future appreciation potential more suited to bonds than an equity.

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