Consumer Sector Ideas

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Mead Johnson Nutrition -- >>> 10 food stocks with tasty potential


Jim Jubak

6-14-13


http://money.msn.com/stock-broker-guided/10-food-stocks-with-tasty-potential


Mead Johnson Nutrition


You get a good sense of the opportunities for selling baby formula to China by visiting any convenience store in one of the New York's Chinese neighborhoods. In Queens, for example, shop windows are stacked with cans of infant formula for sale to customers traveling back to China or for shipping by locals to relatives in China. That reflects just how much demand there is in China for overseas brands of infant formula that promise safety. (In 2008, six babies in China died and 300,000 became ill because of melamine contamination in infant formula. In 2010, Chinese authorities seized 64 tons of contaminated raw dairy materials.)

Last year, 75% of Mead Johnson Nutrition's (MJN) revenue came from sales of nutritional products for infants, children and expectant mothers outside the United States; China alone accounted for 30% of sales. (China/Hong Kong is now the company's No. 1 market, with the United States second and Mexico third.)

The company's sales in China/Hong Kong have doubled over the past three years, and the sales breakdown has shifted. Premium nutrition products now make up more than half of sales.

Mead Johnson's five-year return on capital is 41.3%, compared with 11.2% for its industry as a whole and 9.9% for the stocks in the Standard & Poor's 500 Index ($INX). The shares trade at 24.7 times projected 2013 earnings per share.

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