Paul Harris, CFAKraft Heinz CompanyKHCDON'T BUYApr 22, 2025

Today, they reported a much-better-than expected quarter. Shares popped 2.35% after drifting lower for the past 4 years. It brought in a new CEO recently. It's a turnaround story.

Same comments as General Mills. Is unfairly beaten up, pays a good dividend and worth holding for many years.

Took on a lot of debt during merger, and still debt-laden. Terrible ROIC. Warren Buffet's admitted that this is one of his big mistakes. As well, GLP-1 drugs have put people off processed food. No reason to own.

Old brands that the younger generation is not turning to. Red dye is in a lot of those products, and the FDA has banned that. Even Kraft Dinner is not getting traction, though consumers are pinching pennies. Lots of FCF to pay out the dividend; payout ratio now 70%, so it's not running out of cash. Would be hurt if sales tumbled and FCF falls.

People are now more concerned about what they eat. This company's brands are associated with processed foods. It's not going away, but brands will have trouble growing. You'll just get the dividend unless it can come up with some new ideas. Any boom in the US will boost food stocks way less than other areas.

We're seeing the start of an M&A boom. The street yawned when they heard about the KHC deal, yawning that the company is breaking up, spinning off a part of its grocery business, but that's dead wrong. It will keep is fastest-growing brands like Heinz Ketchup and Philly Cream Cheese. The market sees no value in slower brands like Velveeta Cheese, but that's wrong.

Gives you some cover at times like these. But on the other side, you're faced with changing food habits and GLP-1 drugs. May not be a lot of organic growth in this type of company. Chart is lumpy.

Consumer staples are outperforming in the last few days, and that speaks to the advantage of having a balanced portfolio. Companies like KHC, UL, KVUE, and Nestle. It's not that they won't be affected (their costs would go up), but they're far less cyclical than other businesses. Earnings will be much more stable. Earnings could fall 10%, but not 50%. Dividends will be sustained.

Companies like Unilever and Nestle are huge in NA, but huge globally as well.

Folks over 25 have some nostalgia for the brands. Product offerings to the market have been challenged. Consumer has evolved to be more health-conscious. Despite yield of 5.5%, stock price is more indicative of its future.

It deserves to be struggling. It has the worst collection of brands. Shares deserve to go lower.

Oscar Meyer brand up for sale - will be interesting to see if full value is realized. Does not think it will be notable. Don't buy. 

Very strong company with excellent brands.
Good long term investment.
Consumer staples business with defensive business model.
Recent earnings strong.