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Bet on These Two Food-Packaging Giants for Tasty Returns - Cramer (BMS) (BERY)

January 23, 2013 12:03 PM EST
Just about every type of food from major brands like Heinz (NYSE: HNZ), TreeHouse Foods (NYSE: THS), Mondelez International (Nasdaq: MDLZ), and others have one thing in common: it's all packaged.

Noted stock sage Jim Cramer took a deeper look behind the packaging recently, picking Bemis (NYSE: BMS) and Berry Plastics (NYSE: BERY) as two names investors should know as the world continues to be hungry not just for food, but food innovation as well.

Innovation serves two purposes: to keep food fresher for longer and attract the eye to drive sales. Both are key for food manufacturers and distributors.

He notes that Bemis is the leader in food packing, also offering 2.8 percent yield to investors. Berry recently went public, but is up 17 percent from its IPO last October.

For investors who want a Ron Popeil-type of investment ('set it and forget it'), Cramer says stick with Bemis. The $3.7 billion market cap company trades at just 15 times earnings and boasts an annual growth rate of about seven percent. Bemis also has that 2.8 percent dividend yield to think about.

Those wanting a little more excitement in their lives will do well with Berry, Cramer noted. Though the smaller company has better potential for upside. What investors might note is the $2.1 billion in debt coming due in 2015 and overall $4.5 billion in debt the company is carrying. There's also a private equity investment that could be traded without notice, sending shares lower. Still, at 13 times earnings and 13 percent growth rate, the risk might be worth the reward.

Investors will get a better idea of what Berry is working with when it reports first-quarter 2013 results on January 31st. Bemis is expected to report around the same time. Both stocks are trading higher on the session Wednesday.


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