Silgan: A Split Idea

05/29/2017 2:52 am EST


Neil Macneale III

Editor, 2 for 1 Stock Split

Neil Macneale selects one stock each moth for his model portfolio, choosing from among those companies that have announced a stock split; here's the latest new idea from his 2-for-1 Stock Split Newsletter.

It’s déjà vu all over again. Of the three split announcements since the last issue of 2 for 1, two are companies we have owned in the past and, coincidentally, are both in the beverage and food container business.

It’s nice to have these new splits to look at. Let’s hope this is the start of a pick-up in the number of announcements.

In spite of many similarities, Silgan Holdings Inc. (SLGN) scored significantly higher than Ball Corp. (BLL); as such, Silgan will be our pick for this month.

The stock was in the 2 for 1 portfolio for most of 2010/2012 and earned a 13.9% overall annualized return. It is a world-wide manufacturer of a wide variety of containers for food and beverages as well as other consumer products.

SLGN has done well in a competitive, relatively low-margin business and, compared to Ball and other peers, seems to run a leaner operation while paying a better dividend. SLGN’s volatility measure (Beta) is about half that of the overall market and has been for years.

The company will almost certainly not be a rocket or home run, but SLGN is a well run, very stable business making products that will be in demand in both up and down market cycles. Consider it a very safe bet.

Meanwhile, Ball Corp. — a world champion in the manufacture of aluminum cans — was owned by 2 for 1 from 11/11 through 5/14 and gave us a 27% overall annualized return.

BLL performed better than SLGN in the past. I don’t see that in the numbers this time around, but we’ll keep our eye on it for the next few months.

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