Wednesday, January 28, 2009
(Cont'd from above)...

Jim (cont'd):   

Jim:     That is why tonight when I am search among the great investing icons… I come back and I am cribbing from one of the Buffett, Benjamin Graham, Peter Lynch…no… Luther Vandross… I loved them… I loved them.. I miss them and I love them… but on Mad Money we like not sugar and spice… but steel and spice… that is righter than right for true diversification… a great steel stock that works in Obama’s infrastructure spending… and all the money the Communist Chinese are pouring into infrastructure… will get us out of this soon… and a spice play that works if the recession is long and deep… and people trade down to cheaper foods… they stay at home… you want both… not either or… because you are not clairvoyant… and I am not clairvoyant.

Now, tonight I am talking to two… not one… but two great CEO’s in this jam packed show… one from a recession resistant company… and one from a company that is economically sensitive… and we are going to show you how to be diversified throughout this show… because we can’t be sure what the future holds… as much as we sure try to… what do we want to own if this is a truly worst of times economy… what do we really, really want…. that is right… we want spice… no, not sporty spice… or scary spice… or pot spice… or even Ginger Spice… she winked at me once at a concert… at least I think it was me…

We want McCormick Spice…McCormick & Co. Inc. (MKC)... the largest maker of spices in the world… and a must have recession resistant part of a good diversified portfolio.

Why McCormick?…

Well, first resiliency… the company reported a better than expected quarter today… beating the streets earnings estimates by .02 cents… but we have liked this one for a while… McCormick is best of breed… it has met or exceeded the streets estimates for the past 6 quarters… McCormick is nothing if not consistent… you Wikipedia… is that a verb… you Wikipedia of consistent your are going to see spices… the stock is trading at 13.7 time earnings… in the past 9 years it has traded between 11 times earnings and 35 times earnings… so we are at the low end… so while this stock trades at a premium to other food plays… it is trading to a discount to itself… to itself… now I have got to tell you something… I mean, not to be sagacious or sakagious… this is a Simon & Garfunkel story… and no Art was not all that untalented… I think it is a parsley, sage, rosemary, and thyme to buy McCormick… I have always wondered how come we don’t pronounce like Cramer fave Rose Marie… the senior writer for the Allen Brady show… the model for Mad Money.

McCormick is "the worst of times, eat at home recession play"… as people feel poorer… and go out for meals less… they spend more time cooking at home… and to do that well they require… spices… I stock up in my panic room in my fallout shelter… what do you have in yours… when we talked to James Skinner, the CEO of McDonald’s on Monday… he told us that the real competition that the real competition isn’t other fast food joints… it is people eating at home… we also know from Tupperware, Rick Goings… that more people are cooking at home… this is a trend that has just begun… the notion of it ending right now is fool hearted… which is why I like McCormick for the long haul… but don’t take it from me… lets hear from a guy who is the most consistent of CEO’s in a consistent of companies… let’s hear from Alan Wilson...

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Start of CEO Interview with
Alan Wilson, CEO of McCormick Spices...
 

Jim:        Mr. Wilson welcome to Mad Money...

Alan:      Thanks Jim.

Jim:        Your company, you used the term right up top in your terrific conference call, is resilient. How do you get, how can other companies be resilient? What does it take?

Alan:      We are fortunate to be in a great business. We are flavoring food, and we are making products that people like that make their meals better. That is not a very expensive addition to their meals, and something that in most times, they do not want to live without. We are also serving across a broad range of channels, everything from restaurants to eat at home. So, we try to be there wherever the consumer is eating.

Jim:        One of the things that I am struck by, and I wish the analysts would pick up on it. I usually try to find a company that offers a value solution, or a premium solution, because I can never find one that offers both value and premium. You have got the whole spectrum, don’t you?

Alan:      We do. We go everything from ingredients all the way thru to premium value added products. And even in our consumer franchise, we cover virtually every price point.

Jim:        How did you get the Lawry’s? How did you manage to get the whole shelf space? You are really like the whole shelf space now in the supermarket.

Alan:      Oh, I would never say Jim. But thanks. Lowry’s is great addition to our business. It is something that we have wanted a long time. And it is just a natural fit for our business. It is a great product. It’s got loyal consumers. And it takes us into liquid marinades, which is a category that we have never competed in.

Jim:        Before when I was heavy, I have to admit that I used to have the baked potatoes with a lot of the seasoning. But I had to cut those out. Alright, one of the things that, it wasn’t all perfect because you had foreign exchange, and I thought that Europe would be stronger. Can Europe come back? Because they have weak economies, I thought they would be staying home more.

Alan:      Europe we have seen, especially in the last 3 months, the last year, a real weakness. What we are starting to see now, thru December at least, and in the beginnings of January, is more stabilization of volumes in Europe. Europe went very fast and we think that now we are starting to see more stabilization in Europe.

Jim:        Really, okay good. Because I know, one of the things that is a shame. Is that you had, I know it is very difficult, people will look at a headline number… I am trying to explain to people who don’t have headlines.. but it looked like your numbers weren’t nearly as strong as they really are because of the whack of foreign currency. I mean you really did take it on the chin foreign currency wise for the quarter, didn’t you?

Alan:      That is right, we are about 40% outside the U.S. and foreign currency at current rates is really going to be a headwind for us as we go thru the year. But we expect with the integration of the Lowry’s acquisition and the strong fundamental growth, that we are going to be able to help offset that.

Jim:        I think people have to understand how hard it is to have double digit growth in that environment, but you still deliver. A lot of my other consumer product companies couldn’t. Now, there was something that was very exciting, the analysts didn’t pick up on it… only one question, but I think it represents the future of your great company… which is the McCormick Science Institute… and the fact that there could be… look, this is a country that if you know that if you can eat broccoli and you know that it might help you not have cancer… if you can cut out salt and lower your blood pressure… we will do anything in this country for health… what are the results of the Science Institute saying about spices?

Alan:      What we are finding that a lot of the anecdotes that are out there, are actually scientifically validated. And we are doing the research on that. We have recently launched on the seven super spices. And a campaign that you can use a lot of things like cinnamon, and curry powder, and turmeric, and the things that really do have high rack values, which is a measure of the anti-oxidants that are really good for you and taste great.

Jim:        One last question, what would, what is an anti-oxidant do? What we be taking it for?

Alan:      Oh gosh, I am not a doctor. But what it does, it frees up your blood flow and does a lot positive things for, for what you…

Jim:        Alright, I think it is the future… I mean honestly… I think that when people realize… that… they will be like… it will be one of things where I can put spice on it and I am going to get better. They are going to do that. Alan Wilson, you delivered a fabulous quarter despite huge foreign currency headwinds, you are resilient, thank you so much for coming on Mad Money.

Alan:      Thanks for having me, Jim.

Jim's comments AFTER the interview:     Guys look… the stock is 10 points off it’s high… you are looking for something that you can put away… so that you are not… so you can sleep at night if the stimulus plan doesn’t work… I say… spice up your life with McCormick & Co. Inc. (MKC).

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[verbatim recap]

[end of segment]

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