Company Description
Fortune Brands, Inc. is a $6 billion leading consumer brands
company. Its operating companies have premier brands and leading
market positions in home and hardware products, spirits and wine,
golf equipment and office products. Home and hardware brands
include Moen faucets, Aristokraft, Schrock, Diamond and Omega
cabinets, Therma-Tru door systems, Master Lock padlocks and
Waterloo tool storage sold by units of Fortune Brands Home &
Hardware, Inc. Major spirits and wine brands sold by units of Jim
Beam Brands Worldwide, Inc. include Jim Beam and Knob Creek
bourbons, DeKuyper cordials, The Dalmore single malt Scotch, Vox
vodka and Geyser Peak and Wild Horse wines. Acushnet Company's
golf brands include Titleist, Cobra and FootJoy. Office brands
include Swingline, Wilson Jones, Kensington and Day-Timer sold by
units of ACCO World Corporation. Fortune Brands, headquartered in
Lincolnshire, Illinois, is traded on the New York Stock Exchange
under the ticker symbol FO and is included in the S&P 500 Index.
[Source: Company Press Release]
Reasons to Invest:
This week's bearish activity has bulls scratching their heads.
The INDU Dow Jones Industrial Average plummeted this week, as it
lost 467 points by Thursday's close. If the 100-DMA didn't turn
out to be support today, we just might have seen a return to 9000
in the next few sessions. It's easy to see that the market is
certainly unruly at the moment, thus making this week's Drip
selection even more difficult to pinpoint.
However, I am in high spirits when I say that I believe we could
see further upside in Fortune Brands (NYSE:FO). Even though our
market is being supported by a weak dollar, plenty of money has
been distributed into Fortune Brands's whiskey, bourbon, and
wine.
Their Q4, year-end, results were in the green as Fortune Brands
revenues grew by 9%. Their operating margin expanded by 19% and
net income rose by 10% to $579 million. The company reported
that the increase in their figures is largely due to the fact
that their Moet faucets, Master Lock padlocks, Jim Beam-spirits,
and Cobra golf products all outperformed or sold above
expectations in the fourth quarter.
On top of that, FO said that they are targeting double-digit
growth in diluted EPS before charges/gains, for the full year of
2004. If FO was to achieve this task their net income would be
right around $640 million
Standard and Poor has a 5 star rating on FO and has a recently
raised target price of $87 by year end (old target price was
$83).
It's hard to imagine what really caused this cyclical to take
off. This quiet American company has the same chart as most of
the stocks traded on the NYSE. In March of 2003 the company
trended into a tight range regression channel, of which has
served as support and resistance for the stock for an entire year
(now). Even this past week of profit seeking couldn't cause the
stock to remain below its lower channel bars for more than one
session. Today, the 50-DMA served as holding grounds for FO, as
the stock used this level to bounce back into its range bound
channel.
Last Friday FO set a new all-time high of 73.75 and I am
anticipating a retest of this level in the coming weeks. The
MACD on the daily chart is currently on a sell signal on this
week's recent weakness, but the monthly and quarterly chart are
still noting a buy signal. The point and figure chart on FO
represents a 3-box reversal chart. I have a bullish price
objective of 125.00 on Fortune Brands.
Reuters has a no risk rating on new positions of FO. They have a
dividend percentage growth rate expectation of 14.71 percent over
the next year and 6.60 percent over the next five years.
On January 27th, FO declared a regular dividend of $0.30 per
share of common stock, which tallies out to a an annual dividend
yield of 1.69 percent. The payable date for the dividend WAS
March 1st, 2004 to shareholders on record as of February 11th.
The company also declared a regular dividend of 66.75 (cents) per
share on their Convertible Preferred Stock. This dividend held a
payable date of March 10th, 2004, to shareholders on record as of
February 11th.
This ends another exciting episode of the DripAdvisor.com Drip of
the Week. Stay tuned next week, as we will spotlight another
stock worthy of the DripAdvisor.com limelight.
Until Next Week,
Nich Sheldon
Editor
Broker Recommendations
Strong Buy 3
Buy 3
Hold 0
Sell 1
Strong Sell 0
Brokers Covering 7
DRIP Information:
Shares to Qualify = 1
Auto-reinvestment = No
Accept Foreign Accounts: Yes
Temper Enrollment: Yes
Min/Max Investment = $50-$15,000/Quarter
Reinvestment Fees -
Dividend investment fees: 0
Cash investment fees: 0
Auto reinvestment fees: N/A
Transfer Agent:
Bank of New York
800-225-2719
Corporate Headquarters:
300 Tower Parkway
Lincolnshire, IL 60069
Phone: (847) 484-4400
Fax: (847) 478-0073
