Société BIC SA

Mass-producing pens, lighters and razors may not be glamorous, but it sure is profitable. Despite the decline of smoking and handwriting, the firm will...

Thesis

Mass-producing pens, lighters and razors may not be glamorous, but it sure is profitable. Despite the decline of smoking and handwriting, the firm will survive by broadening its target markets. And even if they don’t, there’s a long runway of cash flow equity investors can extract. I rate the shares a buy as they offer a 56% upside and a 9% internal rate of return.

Summary

• Company name: Société BIC SA

• Ticker: BB

• 52-week range: €43–71

• Market cap: €2.8bn ($3bn)

• Price: €64

• Target: €93–107

• Upside: +56%

• Recommendation: Buy

I) Story

Business model

BIC is a French manufacturer of low-cost pens, razors, and disposable lighters. It sells 90% of its products to retailers and distributors and the remaining 10% through its online shop. Despite comprising just 39% of sales, the company’s lighter business makes three-quarters of its profits.