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Author: TMFBigFrog Big red star, 1000 posts Old School Fool Home Fool CAPS All Star Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: of 506  
Subject: Re: New iPIG Portfolio Pick - Scotts Miracle-Gro Date: 1/7/2014 10:53 PM
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Hi kelbon --

Forgive the slow reply, but the Fool's disclosure policy said "can't talk about a company being bought or sold within 2 market trading days", so I didn't.

When it comes to Coca-Cola and why it wasn't picked, the answer is largely one of "you pay a high price for a cheery consensus."

When it comes to Scotts Miracle-Gro, yeah -- it's in a tough industry, but it seems to be the one player that has been fairly consistently able to generate profits (though as you pointed out, the profit levels themselves haven't been all that consistent).

It's definitely a case where the signaling power of dividends will be very useful -- either directly, as the company raises or chooses to not raise its dividend, or indirectly as the company's dividend either remains supportable or starts to get unsupportable.

That said, Scotts Miracle-Gro was recently able to refinance its debt at lower rates and to relax debt a covenant, which together should help it lower its cost of borrowing and boost its margin. If nothing else, that should help 2014.

Best regards,
-Chuck
Inside Value Home Fool
Disclosure: I own shares of Scotts Miracle-Gro
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