Nestle is a Blue Chip on the Pink She...
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Jul
30
John Murphy
Nestle is a Blue Chip on the Pink Sheets
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Stocks listed on the “Pink Sheets” have a bad reputation.  But there are many Blue Chips that trade on the Pink Sheets.  Many are foreign, such as Nestle (PINK: NSRGY), the Swiss consumer foods giant.

There are many blue chips like Nestle that have chosen to list on exchanges other than the New York Stock Exchange.

These include Kraft Foods (NASDAQ: KRFT) and Samsung (PINK: SSNLF), among others.  The reasons for doing this include saving money and reducing compliance burdens.  With companies such as Samsung and Nestle doing it, that proves that there is nothing negative about being listed on other exchanges for these firms.

But there is plenty that is positive about Nestle for long term investors.

Like Kraft Foods and Samsung, Nestle caters to consumer spending.  It has many recognizable brands that are sold around the world.  Nestle Foods has a very strong presence in emerging markets, where growth will be the strongest for the future.  As with Kraft Foods and Samsung, that provides a foundation in adverse economic conditions.

But there has been nothing contrary about the stock performance of Nestle.

Attractive publicly traded companies bring in capital, no matter the listing exchange.  The dividend yield of Nestle certainly attracts income investors.  At present, the average dividend for a member of the Standard & Poor’s 500 Index (NYSE: SPY) is around 1.8 percent.  The dividend yield for Nestle is 2.66 percent.   Nestle, like Kraft Foods, has a history of growing its dividend.

Investors should be patient with Pink Sheet listings.

The volume is generally lighter.  The average volume for Nestle is just under 475,000 shares daily.  For Kraft Foods, by comparison, the average volume is 2.29 million shares on a daily basis.  The lower the volume, the less efficient the pricing.  For patient investors, that can lead to discount buying for Blue Chips on the Pink Sheets like Nestle.



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