Should You Invest in McCormick?
McCormick and Company Incorporation is a company based in the United States. The company designs, manufactures, and sells food products around the world. The company specializes in manufacturing rice, spices, herbs, and other similar products. The company operates under McCormick, Club House, and many other unique brands. The company was founded in 1889.
Why You Should?
- McCormick is a great reopening play in an investor’s portfolio. The company saw a drop in demand for some of its commercial products as many large venues like restaurants shut down due to the pandemic. However, once the pandemic is over, the company will see a strong growth return once again.
- The COVID-19 pandemic also boosted the company’s sales in some of the sectors that it operates in. For example, as the pandemic shut down restaurants, many consumers around the world started to make their own food at home. This caused a spike in sales of the company’s consumer brands of products, which can be found at grocery stores and supermarkets around the world.
- McCormick, like many other food companies, is an extremely safe investment option. Despite the economic conditions, people will continue to spend money on food in order to maintain a high quality of life. This will benefit the company and its investors go through tough economic times.
- The company offers a great dividend to investors. At the moment, the company offers a dividend of $1.36, or 1.71%, per stock. Though this amount is still not the highest in the food industry, the company still remains a top dividend investment and continues to increase this amount year over year. This will benefit investors in the company.
Why You Should Not?
- The company faces tough competition in the food industry. Some other companies include Conagra Brands, General Mills, and J. M. Smucker. This competition might hurt the company and its investors in the future.
- McCormick, like many other companies, is currently being hurt by several supply chain issues. The company faces a shortage of raw materials as well as packaging materials throughout its business. A shortage of truck drivers and shipping containers has also hurt some aspects of the company’s business.
- McCormick continues to see rising costs due to inflation across the supply chain. Due to massive shortages, the company has had to pay for things like shipping, plastics (costs have risen double digits in this specific category) and has had to pay more money for their employees as well. Inflation has hurt the company and investors until prices normalize.
I think that McCormick is a decent long-term investment due to its position as a good long-term investment, positive impacts from the pandemic, a safe investment option, as well as its position as a good dividend play. However, tough competition, negative impacts from supply chain issues, as well as inflation might hurt the company and its investors in the future.