Spotlight stocks – Kraft Foods Inc.
moneyrelations :: Oct.03.2007
I’m taking a preliminary look at Kraft Foods Inc. (NYSE: KFT) as it has recently been generating some news with the fact that big name investors like Carl Icahn, Nelson Peltz and Warren Buffett have bought stakes in the company.
In March 2007, Kraft was spun off from parent company Altria Group (NYSE: MO – as in Philip Morris, puff puff). In the words of Peter Lynch, Altria “diworsified” getting into food packaging and Kraft faired no better in associating itself with cancer sticks. So, Kraft is in a multi-year restructure plan to pick up the sloth-like growth pace. The company’s portfolio of good eats include: cheese, mac & cheese, pizza, salad dressing, Nabisco biscuit and cookies, Maxwell House Coffee, Post cereals and Oscar Mayer meats. The latter just got spun off into its own unit. What does this mean? Heck if I know, but it might be a sign that Kraft is looking to sell the business. Kraft just sold its beverage brands to Sunny Delight too.
CEO Irene Rosenfeld is making good on her promise to dump sectors that do not fit into Kraft’s growth plans but she did recently acquire Danone’s biscuit business if that’s any indication of where she’s heading. However, despite her cost cutting and stream-lining measures, the company does face some difficulty in the rise of commodity prices of dairy and meat. Kraft had to raise their prices which made them less competetive with other labels. To combat this, Rosenfeld has been pouring money into marketing to reinvent classic brands such as Oreos. Overall, I like the fact that Kraft is moving and shaking and buying back its own shares. It also helps shareholders’ value to have Icahn and Peltz breathing down Rosenfeld’s neck for performance.
It’s an interesting play and I might jump on board.
Here is a quick look at its dividend and EPS table.
| Year | Dividend | EPS |
| 2006 | $0.96 | 1.85 |
| 2005 | $0.87 | 1.72 |
| 2004 | $0.78 | 1.55 |
| 2003 | $0.66 | 2.01 |
| 2002 | $0.56 | 1.96 |
Disclaimer: I like Oreo cookies.
Investing ::
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