The Coca-Cola Company (KO), McCormick & Company, Incorporated (MKC), The J.M. Smucker Company (SJM): Companies to Hold for the Long Term

Page 1 of 2

Companies from the consumer goods sector can make good long-term investments. Consumer companies make things that people need every day such as laundry detergent, shaving cream, tooth paste, and food. Customers continually return for their products providing these companies with some immunity from economic ups and downs. You can buy shares in these companies knowing that customers need their products and ensuring a better chance of long-term superior returns. The four companies below sell products essential to modern life.

The Coca-Cola Company (NYSE:KO)

Bottled water and juice

Beverage giant The Coca-Cola Company (NYSE:KO) built its business around its portfolio of sodas such as Coca-Cola, Fanta, and Sprite. Later it expanded into areas such as bottled water, tea, and juice. Over the past five years The Coca-Cola Company (NYSE:KO) delivered a total return of 70% versus 44% for the S&P 500. Trends point to a slow shift away from Coke’s bubbly portfolio to its healthier non-sparkling products. Non-sparkling volume increased 6% in its most recent quarter. The Coca-Cola Company (NYSE:KO) can leverage its distribution system to capitalize on the healthy lifestyles trend enabling it to profitably sell its water, orange juice, and tea at competitive prices allowing for more long-term growth.

Spices and gravy

Flavoring company McCormick & Company, Incorporated (NYSE:MKC) sells items that improve your eating experience such as salt, pepper, and gravy mixes. It even sells honey in the Canadian market. Over the past five years McCormick & Company, Incorporated (NYSE:MKC) gave investors an 88% total return versus 44% for the S&P 500. The company sells products to grocery stores for individual use and to the industrial food preparation industry. Consumer and industrial sales increased 4% and declined 1% respectively in its most recent quarter. This indicates that the consumer wants to eat in more, stemming from macro-economic pressures. International expansion and new product varieties will move this company forward. Catering to the industrial and consumer markets means that the company can benefit from the eventual return of the consumer to restaurants.

Peanut butter, jelly, and coffee

Food conglomerate The J.M. Smucker Company (NYSE:SJM) makes the famous Smucker’s jelly, Jif peanut butter, and Folgers coffee. This company enjoys a rich history going back over a century, and consumers are familiar with its portfolio of products. Over the past five years the company gave its investors a 144% total return versus 44% for the S&P 500. The J.M. Smucker Company (NYSE:SJM)’s operating income jumped 12% due to volume increases stemming from price cuts taken on coffee and peanut butter. Like most large companies its future lies in international expansion. It also realizes the impact of the healthy lifestyles movement. On Aug. 21, the company bought Enray, “A leading organic, Gluten-Free Ancient Grain Company.” You may see further strategies pertaining to organic food in the future from this company.

Page 1 of 2