Kraft Heinz Company (KHC)

(A Top Pick Dec 31/15. Up 23.69%.) He really likes this company. They have cut costs a lot. Heinz had this great global distribution franchise and Kraft didn’t, so he is looking for them to move a lot of the Kraft products through that. Also, Kraft had some terrible Return on Capital products, so bringing down the number of products is going to help. Also feels they will make a bigger acquisition, possibly a year from now.

He likes this and will continue to hold it. Kraft was very much a US business while Heinz was more global with a global distribution. They are trying to move Kraft products through this global distribution, which he thinks will slowly increase revenue. They’ll also take down a lot of costs as they are very efficient managers.

This looks very similar to a lot of other consumer staple names. The chart is showing a topping pattern, really flat lining over the past 6 months or so, and is now starting to fall. Trading below its 200-day moving average, and the shorter term moving averages are starting to fall. You are paying 25X earnings for the stock, which is not cheap. 2.9% dividend yield.

It has a 2.74% dividend yield. He likes that Kraft was very domestic and Heinz was very international before the merger. There is a lot of room to distribute Kraft products through the Heinz network. Commodity prices have come down and that helped also. You will see a lot more cost cutting over the next little while. He thinks they will make a bigger acquisition.

This has done well, but longer-term you would have to think it is not the stock you want to be in. It is mainly in developed markets, as opposed to emerging markets.

He really likes the story. This is a combination of Kraft and Heinz. They are a big cost cutter. Kraft was primarily a domestic company and Heinz was much more of a global distribution business, and they think they can take a lot of Heinz products and move through the global distribution so you can see some more top line growth. Thinks they will do another acquisition once they have digested this. Dividend yield of 2.69%.

This was a merger of Kraft and Heinz. Earnings just came out and they quadrupled their bottom line because of cost cuts and lower commodity costs. Kraft was a much more US domestic business and Heinz was a much more international business, so cross-selling will be really important. Trading at around 20X earnings. This will do another acquisition, much bigger, down the road. Dividend yield of 2.8%.

(Market Call Minute.) A consumers’ staple, so it is going to behave. You could also buy (PBJ-N), the ETF of all of these things.

What is very unique about is that it is a great cost cutting story, but there is also some good revenue growth coming through on it. Heinz was a much more international company, and Kraft was much more of a US branded company. Kraft has some great products and will be able to sell off some of them, but also they will be able to use Heinz distribution network and push those products through the rest of the world. Dividend yield of 2.7%.

Really likes the story. Pays a good dividend. Not cheap from a P/E basis, but 2 things are happening. Heinz had a great global distribution while Kraft is really North American. Thinks Kraft products are going to be better distributed through the Heinz distribution network. Expects to see some really decent organic growth, and a bigger acquisition down the road. Very good at cost cutting, and expects they will be taking a lot of costs out of Kraft over the next couple of years. Dividend yield of 3.01%.

This is a merger of Kraft and Heinz. Very good on costs, and thinks they are going to be able to derive a lot of revenue from the Heinz business. Dividend yield of 3.16%.

Trading at about 25X forward earnings with a 12% long-term growth rate. You are paying about a 2X PEG ratio, which sounds like a lot, but you are paying this kind of valuation for a lot of consumer stable names. Dividend yield of almost 3%. Given the merger, there is greater opportunity for margin expansion through increased negotiating power, distribution and cost efficiencies.

She sold it. She is not a buyer here because of excessive valuation. Prefers MDLZ-N because it is more emerging market.

Prefers companies with pure growth that comes off the top line. You can only cut costs and become more efficient for so long. What tends to happen with a lot of these stocks is that people assign them a valuation that assumes that the cost cutting can go on indefinitely. This is a good solid company, but too expensive.

The dividend is fully taxed in Canada. KRFT-Q split into two companies. There is no Canadian equivalent. He would just hold onto it if you have a huge tax burden.