Few Match B&G Foods On Dividend-Fundamentals Criteria


Few stocks can matchB&G Foods ( BGS ) as an income stock that also has strong fundamentals.

IBD ran a screen with these factors: an annualized dividend yield of at least 3.5%; a Composite Rating of 95 or better; a best-possible A in Sales + Profit Margins + Return on equity; an up-down volume ratio of at least 1.1; and daily trading volume of at least 350,000 shares daily.

In IBD's database, only B&G and three other stocks met the criteria. (The three other stocks wereCopa Holdings ( CPA ),Giant Interactive ( GA ) andSeagate Technology ( STX ).)

New Jersey-based B&G Foods makes shelf-stable food products and household products, such as Cream of Wheat, Ortega salsa and taco shells, Regina vinegars and Static Guard.

Earnings growth in the past three quarters on a year-ago basis has been strong -- 30%, 27% and in Q3, 40%. Revenue grew 20%, 15% and 16% in the same periods.

The Street expects EPS growth to be 30% in Q4 on a 20% pop in sales.

The company has benefited from a November 2011 acquisition fromUnilever ( UL ) of brands that included Mrs. Dash, Sugar Twin, Baker's Joy, Molly McButter, Static Guard and Kleen Guard.

The November 2011 acquisition contributed $20.2 million of the $21.2 million revenue increase for the third quarter.

On the chart, B&G Foods is currently shaping a second-stage pattern. The stock recently cleared resistance around 31.05, which could serve as an entry for an aggressive investor.

Volume was 59% above average.

The stock is lingering near this alternative buy point.

There are risks associated with B&G Foods.

Commodity prices -- such as those for agricultural products, meat and poultry -- could hurt margins, should inflation develop. B&G tries to lock in long-term contracts for protection.

The company's debt to equity ratio is 302%, which as the company says in its 10-K, "could restrict our ability to pay dividends."

B&G Foods also has some concentration risks. In 2011,Wal-Mart Stores (WMT) accounted for almost 18% of net sales.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of The NASDAQ OMX Group, Inc.

This article appears in: Personal Finance , Investing Ideas

Referenced Stocks: BGS , CPA , GA , STX , UL

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