By Peet Serfontein & Khumbulani Kunene
We initiate a long position with a target price of $91.00 and a stop-loss of $79.00 (risk/reward ratio 2.9:1).
McCormick & Company is a leading American company that manufactures, markets, and distributes food-related products including spices, herbs, extracts, seasonings, flavourings and other specialty products. The company has a strong presence in both the consumer and industrial markets, supplying households, restaurants, and food manufacturers with high-quality flavour solutions.
Established in 1889, the company has grown into a global powerhouse with a presence in over 150 countries, while maintaining a strong heritage of innovation and sustainability. McCormick distributes and markets its products under brands including Lawry's, Club House, and McCormick, as well as ethnic labels Zatarain's, Thai Kitchen, and Simply Asia.
Technically, the price is forming a symmetrical triangle pattern which presents a promising investment opportunity (refer to main chart). As the stock tests the upper range of the pattern, it suggests that upward buying pressure is forming with the possibility for a breakout to the upside.
The price is also in the accumulation phase of the Wycoff price cycle - indicating the early stages of a new uptrend, where smart money, institutional investors, and informed traders are accumulating shares at discounted prices before a significant rally.
Upside price momentum per the MACD indicator, as well as the upward trajectory of the on-balance volume (OBV) indicator supports our bullish view.
| Share Information | |
|---|---|
| Share Code | MKC US |
| Industry | Food, Beverage & Tobacco |
| Market Capital (USD) | 22.1 billion |
| One Year Total Return | 9.90% |
| Return Year-to-Date | 7.96% |
| Current Price (USD) | 82.31 |
| 52 Week High (USD) | 86.24 |
| 52 Week Low (USD) | 66.88 |
| Financial Year End | November |
| The price remains above its 200-period simple moving averages (SMA), reflecting both short-term and long-term strength in the stock. | |
| Consensus Expectations (Bloomberg) | ||||
|---|---|---|---|---|
| FY24 | FY25E | FY26E | FY27E | |
| Headline Earnings per Share (USD) | 2.95 | 3.05 | 3.31 | 3.60 |
| Growth (%) | 3.36 | 8.46 | 8.83 | |
| Dividend Per Share (USD) | 1.68 | 1.81 | 1.92 | 2.04 |
| Growth (%) | 7.50 | 6.20 | 6.26 | |
| Forward PE (times) | 26.24 | 24.16 | 22.86 | |
| Forward Dividend Yield (%) | 2.19 | 2.33 | 2.48 | |
| Medium-term growth prospects remain positive for the group, with momentum expected to gain further strength over the next few financial periods. | ||||
Buy/Sell Rationale:
Technical Analysis:
Fundamental view
| Share Name and Position | STE US - Buy (Continue to hold) |
HAS US - Buy (Continue to hold) |
MU US - Buy (Continue to hold) |
|---|---|---|---|
| Entry | 217.20 | 61.04 | 89.05 |
| Current | 226.65 | 61.49 | 86.89 |
| Movement | +4.4% | +0.7% | -2.4% |
|
An Elliott wave price that is forming a trough remains of interest. Testing its 200-day simple moving average. Upside momentum is supportive.
Our profit target remains at $239.00 with a trailing stop-loss at $283.00. Exit the trade by 18 April 2025. |
A developing ascending triangle pattern remains of interest. Remains below its 200-day simple moving average. Regaining upside momentum is supportive.
Our profit target remains at $70.00 with a trailing stop-loss at $57.50. Exit the trade by 2 July 2025. |
A price developing a double bottom pattern remains of interest. Remains just below its 200-day simple moving average. The start of downside momentum is a concern.
Our profit target remains at $116.00 with a trailing stop-loss at $78.00. Exit the trade by 7 May 2025. |
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