This Day On The Street
Continue to site
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here

Chart of The Day: Beam

NEW YORK (TheStreet) -- Chart of the day: Beam (BEAM)

Why? Because it surged on a dismal day, where negative retail news out at the ICR XChange Conference killed the averages.

But more importantly, because it is the product of a break-up that was right to do. Yes, the stock surged 25% on Monday to $83.42 from $66.97, but far more impressive is the stock's performance over the last couple of years when it traded as a standalone entity in the low $40s in October of 2011.

Remember, the original Fortune Brands was a real mis-matched mosaic of firms from a liquor business to home and furnishings to, yes, golf. A true sum-of-the-parts story. In May 2011, it sold off the Golf segment for $1.1 billion. Then in October 2011, Fortune spun off its Home & Security business to create Fortune Brands Home & Security (FBHS).

This left the fabulous liquor business as a stand-alone company, with a new name Beam. Shrinking to grow!

Must Read: Morning Movers: Beam Up on Takeover; Retailers Disappoint; Wendy's Heads Higher

Beam--the name behind Jim Beam, Maker's Mark, Sauza tequila, Courvoisier cognac, Canadian Club whiskey, and Teacher's Scotch--has been a pure play primed for growth and, well, takeover. This is particularly attractive when its peers, are (1) family owned, like Brown Forman (BFB), (2) very large, like Diageo (DEO), or, (3) part of a larger conglomerate like Moet Hennessy, part of Louis Vuitton.

And its liquor focus makes it an attractive 'vice' stock - a name that works in good times, bad times, and uneven times - a defensive industry with growth.

The simple math tells an incredibly compelling story. When the old Fortune Brands announced it would spin off into three businesses in December 2010, it had an enterprise value of $13 billion at the time.  Compare that with the current enterprise value snapshot (Golf segment was sold for just over $1 billion in May 2011, Fortune Brands Home & Security has current enterprise value of $8 billion and Beam's total consideration was $16 billion): That adds up to $25 billion in enterprise value currently... or $12 billion in value creation (or almost a double) in just three years.

Beam is just one of the names that has benefitted from breaking up - think about ConocoPhillips (COP - Get Report) and Phillips 66 (PSX), which were formerly one integrated oil company. Or Marathon Oil (MRO - Get Report)and Marathon Petroleum (MPC), which split in the same fashion. News Corp (NWSA) has benefitted from splitting off Twenty-First Century Fox (FOXA). Some other examples of value creation? Pfizer (PFE) and Zoetis ZTS, Abbott (ABT - Get Report) and Abbvie (ABBV), Kraft Foods (KRFT)and Mondelez (MDLZ), White Wave (WWAV) which was part of Dean Foods (DF), and Post Holdings (POST) which was spun off from Ralcorp and is now part of ConAgra (CAG). These are just a few... Shrinking to grow- chart of the day!


Chart of I:DJI
DOW 17,773.64 -57.12 -0.32%
S&P 500 2,065.30 -10.51 -0.51%
NASDAQ 4,775.3580 -29.9330 -0.62%

Nicole's Tweets

Select the service that is right for you!

Action Alerts PLUS

Portfolio Manager Jim Cramer and Director of Research Jack Mohr reveal their investment tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
  • Weekly roundups
Real Money Pro

All of Real Money, plus 15 more of Wall Street's sharpest minds delivering actionable trading ideas, a comprehensive look at the market, and fundamental and technical analysis.

Product Features:
  • Real Money + Doug Kass Plus 15 more Wall Street Pros
  • Intraday commentary & news
  • Ultra-actionable trading ideas
Trifecta Stocks

Trifecta Stocks analyzes over 4,000 equities weekly to find the elite 1% of stocks that pass rigorous quantitative, fundamental and technical tests.

Product Features:
  • Model portfolio
  • Trade alerts
  • Recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
Stocks Under $10

David Peltier uncovers low dollar stocks with serious upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
  • Weekly roundups
Quant Ratings

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
  • Upgrade/downgrade alerts
Dividend Stock Advisor

David Peltier identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Alerts when market news affect the portfolio
  • Bi-weekly updates with exact steps to take - BUY, HOLD, SELL
Growth Seeker

Chris Versace, using sophisticated stock screening and fundamental research, identifies potentially explosive small and mid-cap stocks.

Product Features:
  • Model portfolio
  • Small-cap and mid-cap focus
  • Intraday trade alerts
  • Weekly roundups
Daily Swing Trade

Master swing trader Alan Farley uses his sophisticated software screens to review thousands of stocks each day for you, to find just the handful that meet his demanding criteria.

Product Features:
  • Daily commentary and coaching on swing trading
  • Technical charts and analysis
Top Rated Stocks Top Rated Funds Top Rated ETFs