Stocks for kids

I remember once my Accounting instructor told his father bought him a Kansas ulility stock when he was a kid (maybe 10 years old or so). The interesting part is everyday he would read the stock section of newspaper and check the price of his stock. One reason he chose accounting as his profession. I also believe everyone remembers his/her first stock purchase clearly, for me that’s also my first employer (a large state owned manufacturer decided to go public in early 1990s). For my kid, I am think of the follow stocks for “buy and hold”. Note this is mostly for fun, not trying to making money for kid’s college fund. That being said, those companies have excellent fundamentals and will be in the business for a long time, I think.

Got milk?

Bought some Mead Johnson Nutrition (NYSE: MJN) shares last week. I wrote about it couple months ago before its IPO. This is one of my defensive plays in this downturn. It appears to me people will not stop making babies in the recession, from my very limited observation. More importantly, after China milk powder incident last year, Mead Johnson’s Enfamil is likely to get more market share in China. Yes, China economy growth slowed quite a bit due to the slowdown of export. Yes, people are losing jobs overthere. Yes, Chinese people are cutting back on discretionary spending. But one thing won’t get cut is baby’s formula. Same argument could be made for India, and Brazil…

Mead Johnson going IPO

I remember reading this last year, this morning I read it from Yahoo Finance. Here is the prospectus at SEC, and here is a glimpse at IPOHome. It looks like they are going to IPO on Feb 10 (from the roadshow, again from IPOHome).

I think most people heard about their product enfamil (Amazon, Wiki), the infant formula, whether one has kids or not. For instance, I don’t have kids now, but I bought some enfamil for my friends back in China last year. On first glance, this is a good IPO. If they trade around the $21 to $24 range (the IPO price range), I may get some. In this recessionary environment, I think most parents still feed their infants with best formula (if possible). This is especially true back in China.

Mead Johnson was a division of Bristol Myers Squibb before this IPO. Some background about this spinoff from the deal. The company plans to pay 20 cents quartly dividend. Like the EMC/VMWare spinoff, the parent company is only selling a minority stake (12.5%, according to Reuters). I think this combined with current market condition, is the reasons why this IPO did not receive much attention lately.

Snapshot: offering 25 million shares, range $21 to $24, expected date week of Feb 9. Dividend (proposed): 80 cents per year.