This column was originally published on RealMoney on July 28 at 2:02 p.m. EDT.

If it seems that shares of


( WWY) have been curiously strong recently, you need look no farther than the mint section at your local convenience store.

The candy giant closed its acquisition of the Altoids brand at the end of last quarter. Improved sales of that powerful unit combined with outstanding volume growth across the rest of its lineup generated a sweet earnings report on Tuesday.

Chewing gum and mints are certainly two of the most underappreciated consumer-products categories. They are nonharmful, somewhat addictive discretionary foods that get the best display in any grocery or convenience store, right next to the cash register.

And boy, do they generate sales. Wrigley reported earnings of $162.4 million in the second quarter, or 72 cents per share, compared with $139.2 million in the same period last year, on quarterly sales of $1.04 billion, up from $958 million last year. Analysts were expecting just 68 cents, so it was a big beat.

The most compelling piece of the report -- boding well for the future -- was the strength of the company's results across every geographic region and division, with volume up 5% across the board. And gross and operating margins rose 77 and 141 basis points, respectively, showing that the sales gains were obtained on lower expenses. So even though shares rose $2.22 on Tuesday and were up again on Wednesday, there is still upside to the stock as it continues to brainstorm products, make smart acquisitions and generally execute its plan.

One of the reasons Wrigley doesn't get the respect it deserves is that many investors consider it your basic GDP stock. That is, they think that as a foodmaker it should be a slow-grower that can only advance at the piece of the overall U.S. economy. But the reality is that Wrigley has done a tremendous job of expanding its category, generating more demand from current gum-chewers and persuading non-chewers both here and abroad to chew.

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Sales in North America in the past quarter swelled 4%, which was at least 25% better than U.S. GDP for the quarter, largely on the strength of the momentum of its relatively new, and extremely popular, Orbit line, which includes Orbit White. Indeed, the notion that gum can whiten your teeth is an example of category-broadening. Telling customers that gum is not only fun to chew, but that it can freshen your breath and make your teeth shiny incrementally increases the potential customer base. What a concept.

Wrigley plans to build on its success by adding three new flavors in the next six months: Citrusmint and Sweet Mint. That's not quite the same as Doublemint, but close. Adding to the minty fresh theme, the company said it will also add a Bubblemint flavor to Orbit White, which will be sweeter than current sticks. In the rest of its line, Wrigley said it will introduce Triple Treat Hubba Bubba Bubble Tape, Hubba Bubba Max Cherry Lemonade, Eclipse Cinnamon mints and sugar-free Extra Cool Green Apple. You have to wonder how they come up with these names, but they do seem to work.

As I've reported in previous columns about Wrigley, the real growth engine going forward is in China and India. Smith Barney reports that Asian per-capita consumption of gum per year is 0.1 pounds, vs. North American consumption of 1.6 pounds. There is little doubt now that the company's marketing machine is persuading middle-class Chinese consumers to pop a stick of gum. In the last quarter, Asian sales were up 27%, with gains in every region, and now represent 12% of the company's worldwide sales. Acquisition of local gum maker Joyco in early 2004 is now paying off handsomely.

Elsewhere in the world, Central and Eastern Europe sales were also positive, as, again, the company sells the marketing of gum-chewing as an important element of Western pop culture.

From a valuation standpoint, the shares are trading right in the 25-30 P/E band that makes sense for a premium growth brand, accommodating at least an $81 price target for the next six months. This is always a great company to buy on general market weakness, so if you pass for now, at least consider it in the event of a broad selloff in the fall.

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Jon Markman, writer of Value Investor, is the senior investment strategist and portfolio manager at Greenbook Investment Management, a division of Greenbook Financial Services. Separately, he is publisher of StockTactics Advisor, an independent weekly investment research service. While Markman cannot provide personalized investment advice or recommendations, he appreciates your feedback;

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