Skip to main content

Give the Gift of McCormick Stock? Why Action Alerts PLUS Is Watching the Name

Publish date:
Video Rating:
Video Duration:

In this sneak peek from Action Alerts PLUS, co-portfolio managers Chris Versace and Bob Lang explained why the investing club adding McCormick  (MKC) - Get McCormick & Company, Incorporated Report stock to its bullpen last week. 

To catch Chris and Bob's stock picks in real-time, join Action Alerts PLUS today. 


KATHERINE ROSS: Let's take a look at the bullpen, guys, because it is Bullpen Friday. And the name that I want to start off with is actually McCormick. You brought this name into the bullpen fold earlier this week. Chris, we talked about Estee Lauder either yesterday or a couple of days ago.

And one thing that you mentioned was the holiday season. I would argue that you could see McCormick as almost a holiday play, too, because of the amount of spices and whatnot you have to use on your food. Does that hold true? What's [INAUDIBLE] here?

CHRIS VERSACE: You are spot on, Katherine. There typically is a seasonal pattern to the strength of the company's business. It's actually a little longer than you might think. If we dig into the 10 Ks and the 10 Qs and really break down not just the sales but the operating profit, particularly for the consumer business, which is their largest one, it's pretty much from the beginning of summer until sometime early in the new year. It really hinges on when some of the holidays fall.

But you're spot on. So from a perspective of, hey, we are less than two weeks away to Christmas, is now the time to jump on to McCormick, not so sure. That's why we brought it into the portfolio-- sorry-- into the bullpen. Even though we like it up to $95 or so, it's hovering around $88.

Potential downside, as we move past the seasonally strong part of the year to around the low $80s. The question probably, Katherine, is, well, why do we bring this in to the bullpen then? For two reasons, one, the company is-- as Bob used this word earlier-- a machine. They continue to grind out earnings.

They continue to increase their dividend. They've done so for about 35-plus years. And I apologize for the visual, but it's in the bullpen because, like a cheetah, we want to be ready to pounce when the time is right, and we will on McCormick absolutely.

KATHERINE ROSS: No apologies necessary. OK, Bob, what makes this chart look appetizing to you?

BOB LANG: So the stock had a really nice run recently. It ran about, what, 11% or something like that. And it's kind of stalling out up here. I'd like to see it pull back a little bit.

It's very difficult to get into a name, especially that's exhibiting a lot of momentum and has created what's called a V bottom. What we like to do is I like to-- I like to buy momentum names. But we also like to buy stocks that trend. And stocks that trend generally go up a little bit.

They pull back. They go up a little bit. They pull back, et cetera, et cetera. So they create higher highs and higher lows along the way. If we just have higher highs going on, again, it makes for difficult entry points into the stock.

But I do like the relative strength. The momentum has been very good. Volume has been strong, as the stock has been rallying. So I don't have any problems with McCormick here, interesting name. We've owned the stock before in a different portfolio in Trifecta, and we made some good money in the name, so nothing wrong with coming going with something familiar.

Chris has been spot on with the fundamentals over the past several couple of years as he's been following this company. And, technically, the stock looks strong. And I think we've got some more upside to blast through $100.

Related Videos