Eggs
The largest American egg producer Cal-Maine Foods Inc (NASDAQ:CALM) sold nearly 10 billion eggs in the United States in 2012 according to its investor relations website. It also sells specialty eggs under the Egg-Land’s Best, Farmhouse and 4-Grain names. Cal-Maine foods also owns a little over 26 million “layers” or chickens whose sole purpose lies in the function of laying eggs.
In 2012, Cal-Maine Foods grew revenue and free cash flow 18% and 66% respectively. Higher egg prices served as a catalyst for growth. Cal-Maine Foods Inc (NASDAQ:CALM) sports an excellent balance sheet with cash to stockholder’s equity coming in over 54%. Long-term and total debt to equity ratios stand at an impressive 14% and 52% respectively. Its operating income exceeded interest expense by 18 times.
Cal-Maine Foods pays out 33% of its net income in dividends. This means dividends typically spike a little higher toward its third quarter, which encompasses the Christmas holiday season where it sees higher seasonal sales.
Cal-Maine Foods Inc (NASDAQ:CALM) Foods’ Director, President, and CEO Adolphus B. Baker beneficially owns 14% of the company’s stock, a significant stake. This means that his interests line up with the rest of the shareholding public.
Cal-Maine Foods believes that it will gain market share in the specialty organic egg market capitalizing on the healthy lifestyles trend. Cal-Maine will also continue to grow through acquisitions, construction of new facilities and “organic” growth (pardon the pun) through higher demand for its organic egg products and expanding beyond the 19% market share the company already holds.
Cereal
You may eat Cheerios cereal for breakfast made by food conglomerate General Mills, Inc. (NYSE:GIS). General Mills makes more than just breakfast foods–it also makes and sells flour, green beans under the Green Giant label, and it owns the Betty Crocker line of cake mix and condiments, as well as others.
General Mills, Inc. (NYSE:GIS)’ revenue and free cash flow grew 12% and 96% respectively in 2012. Its balance sheet doesn’t measure up quite like Cal-Maine Foods Inc (NASDAQ:CALM). Its long-term debt to equity and total debt to equity ratios stand at 90% and 194% respectively. Its operating income exceeds interest expense by seven times.
General Mills, Inc. (NYSE:GIS) pays out a reasonable 46% of its 2012 free cash flow in dividends, currently paying $1.52 per share per year and yielding 3.2%, providing the investor with a decent income on top of possible capital gains.
Future growth for General Mills, Inc. (NYSE:GIS), like most large companies, lies in international and emerging markets. General Mills, Inc. (NYSE:GIS)’ sales in its international segment grew 24% in its most recent quarter. In addition, product acquisitions and innovation will move this company forward.
Oats and Orange Juice
You may enjoy a glass of Tropicana orange juice, a bowl of Quaker Oats, or Cap’n Crunch cereal made by food and beverage conglomerate PepsiCo, Inc. (NYSE:PEP).
PepsiCo most commonly known for its sodas derives roughly half of its revenue from snacks and food. PepsiCo’s snack volume increased 3% versus 1% for its beverage volume in 2012. Factoring out acquisitions, currency fluctuations, etc. organic revenue grew 5% for PepsiCo, Inc. (NYSE:PEP) overall last year.
In 2012, PepsiCo’s cash to stockholder’s equity stood at 30%. It’s long-term and total debt to equity ratios stand at 105% and 233% respectively as of the end of 2012. Its operating income exceeds interest expense by 10 times.
In 2012, PepsiCo, Inc. (NYSE:PEP) paid out approximately 56% of its free cash flow in dividends. Currently the company pays $2.27 per share per year in dividends, translating into a yield of 2.8%.
With consumers shying away from perceived unhealthy sodas, it can capitalize on the increasing demands of healthier foods such as those made by the company’s Quaker Oats subsidiary and its Tropicana juice line. Its future may depend on it.
Conclusion
On the whole, these companies that make products that go into your typical American breakfast sell needed products, own recognizable brands, and possess a fairly wide moat or high barriers to entry. They each pay a decent dividend and their futures look bright. These companies make worthy additions to your Motley Fool Watch List (sign-in required).
William Bias has no position in any stocks mentioned. The Motley Fool recommends PepsiCo. The Motley Fool owns shares of PepsiCo.
The article Investment Ideas From Your Breakfast Table originally appeared on Fool.com.
William is a member of The Motley Fool Blog Network — entries represent the personal opinion of the blogger and are not formally edited.
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