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Abbott Labs - infant nutrition -- >>> 10

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gfp927z   Friday, 06/14/13 05:32:40 PM
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Abbott Labs - infant nutrition -- >>> 10 food stocks with tasty potential

Jim Jubak



Abbott Laboratories

Abbott Laboratories (ABT) is the closest thing to a value play you'll find in the infant nutritional space. Nutritionals made up about 30% of company sales, on a pro-forma basis, after the breakup of the company -- Abbott recently spun off its pharmaceuticals business, now called AbbVie (ABBV). That segment turned in 9% sales growth in the first quarter, but even with 45% of sales in that business coming from emerging markets, Abbott's margins trail those of its competitors.

Management's goal is to raise operating margins in nutritionals unit by 5 full percentage points by 2015. That, plus a companywide goal of raising emerging market sales to 50% of total sales (from 30% now) by 2015, should help fix the company's extremely low return on invested capital -- 10.2% for the last five years. (That figure is for the pre-breakup Abbott. The figure for Abbott Laboratories recently has been just 2%.) The shares trade at 18.05 times projected 2013 earning per share.


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