What makes a company successful?...

... delivering products and services that are relevant and create impact among consumers.

I combine my expertise as a Marketing executive in a Fortune 500 company and my passion as an investor to find the Companies that I think have "cracked the code" with consumers. Advertising does work. When I see a new product that fits relevant consumer trends, and that is supported with a campaign that I find particularly shrewd and innovative, I know that Company is potentially a great investment.

One of the great investors of all times, Peter Lynch, recommends to "buy what you know". You watch TV, go to the supermarket and walk around everyday. Observe... look around: what you see can make you money in the stock market. Now, let's be clear: a Company is not good just because it advertises. What we have to look for is great products supported with -and enhanced by- great advertising. The principle is simple: if something is good enough to draw your interest, it will be of interest to millions of persons just like you.

It is my goal to share with the reader my findings in the world of marketing which I think will turn into great returns for investors. Profit from it!

Sunday, September 28, 2008

Hormel Foods looks appetizing

“From Your Desk Drawer to Delicious - in 90 Seconds. People on the go expect more from their meals. You want it fast, you want it tasty and you want the convenience of packaging that lets you eat without disrupting your busy schedule”

Hormel Foods (HRL) got that right! I discovered Hormel’s line of Compleats microwave meals while wandering in the supermarket a few days ago. I was very excited with the line. As reiterated in one of my last posts, “May you leave in interesting times”, you can bump into interesting investment opportunities by just paying attention to what you see while doing your personal shopping.

Compleats is a line of surprisingly, well, complete meals that do not require refrigeration and that are ready with just 90 seconds in the microwave. Clearly designed with the office dweller in mind, the excerpt of the Compleats web page I started this post with proves to be very insightful. Effectively, office workers who prefer to have launch at the office are always on the lookout for meals that are satisfying, hearty and yet convenient to carry, store and prepare. There are not that many options out there: if you want to remain in the office during lunch time, you have to either deal with frozen dinners –if there is a freezer anywhere near your cube- or some energy bars. That’s it. It is that or trying to make it through the day with a bag of Cheetos in your stomach. Now, there are some other options out there, aren’t they? What makes the Compleats proposition so compelling? I would summarize its competitive advantages as follows:

a) A fairly complete, hearty hot meal. All other non-frozen alternatives are mostly soups or very simple pasta-based meals that are not very satisfying or nutritious.

b) Extreme convenience: most of the microwavable alternative solid meals require some sort of preparation that can be messy and prone to embarrassing accidents in an office environment.

c) Easy storage: Meals with the same level of heartiness and sophistication can only be found in the frozen category, which require refrigerated storage and longer cooking times.

In researching this product, I found out that even though it is not really new, it was recently relaunched with the new name of “Compleats” and the new packaging, a simple sleeve that let the consumers understand tha revolutionary nature of the product. The introduction of the Compleats line couldn’t come at a better time. Adverse economic conditions mean that many office workers who used to go out for lunch are re-considering their options. Even the cheapest fast-food alternatives out there will make you spend $7-$10 for a lunch. A Compleats meal goes for around $3. Scratching eating out and replacing it with Compleats meals is a quick way to save more than $100 a month. Not too shabby.

In my opinion, the Compleats line will become one of Hormel Foods’ shining stars, with a great potential to beef up the Company’s bottom line. It comes at a great juncture as well. Hormel is not a particularly exciting company, but its share price shows the steady growth you’d look for in a keeper. Its margins, as with the rest of the processed food industry, have been under pressure due to the increasing costs in commodities experienced during the last couple of years. These cost pressures are subsiding, which means we could see interesting upward surprises in Hormel’s profits moving forward. At this point, Hormel is really looking like a tasty investment worth taking a bite out of.

1 comment:

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