MONDELEZ INTERNATIONAL INC Common Stock (MDLZ)

The international snack food business that came out of Kraft. It is higher growth than their main staples business. The consumer in emerging markets is growing rapidly. It is an outperformer compared to Staples.

This is 44% emerging markets. They are the number 1 player in biscuits, chocolates, candy and number 2 in gum. Most of those categories have very little private label competition, which is good for pricing. This is really a play on emerging markets for their growing consumer middle class. She sees a lot of runway. FX has been a headwind but she thinks the market has chosen to look through that and to recognize the long-term growth opportunities. The company has been embarking on a margin improvement program as their margins are quite a bit lower than their peers. Yield of 1.6%.

The question is, will this company deliver accelerated growth as expected. The jury is still out. He thinks you are paying quite a high price for what you are getting. Wouldn’t be a buyer at these levels.

44% emerging market exposure. FX is obviously an issue. They are very well placed longer term. She has a longer term view. The stronger growth is from these emerging markets every 2-5 years if you look back that far. This is a chance to buy or buy more.

She likes this company. They will be reporting very soon and earnings have been revised downward because of currency. Have high exposure to emerging markets. She owns this for the long-term secular play of the emerging consumer class in the emerging markets. Operationally they are implementing programs to improve their margins.

Stock vs. Stock. MDLZ-Q vs. KRFT-Q. Fairly expensive. Growth rate will be impacted by strong US dollar. Prefers Nestle because it has a lower multiple to either of the other two.

Mondelez (MDLZ-Q) or Kraft (KRFT-Q)? This is effectively the high growth story and a lower dividend, while Kraft is slower growth and higher dividend. Not sure the market has actually seen that this way as they have rewarded the high dividend Kraft story. This has much lower debt. He likes both stories, but he finds it difficult to digest the multiples on both stories. If there was a decent retracement on the stocks, that would be the time to add.

This was a spinoff from Kraft (KRFT-Q), which took the grocery area. The more growthier parts went to this company. They have quite a big exposure to Europe and emerging markets. He is seeing inflation starting to creep in to their input costs, and they aren’t really able to pass those costs on to consumers. That is squeezing margins. Also, the world is becoming a healthier place, so snacks, salty foods and sugar filled foods tend to be running into a little headwind.

A spinoff from Kraft (KRFT-Q). An emerging markets’ story with about 45% in emerging markets. The consumption of chocolate, biscuits and candy is very low in emerging markets compared to developed markets. Once there is more money in emerging markets, there will be an increased demand for their goods. Operating margins are quite a bit lower than their peers. There is an activist shareholder on board who has suggested that the company be acquired by another company. She would much prefer this over Saputo (SAP-T).

Stock vs. Stock. MDLZ-O vs. UL-N. Kraft’s international good business. Prefers UL-N.

Kraft (KRFT-Q) or Mondelez (MDLZ-Q) for the next 12-18 months? He likes both. One pays a big dividend while the other has higher growth. They are both growth stories and both can be held for a long period of time. 1.6% dividend yield.

A global snacking company. The #1 share in biscuits, chocolate and candy. #2 in chewing gum. 44% of their earnings are from emerging markets where there is the expanding middle-class. Consumption per capita in that category is very low, so she sees a lot of growth as the middle-class expands. The company is improving their margins. Yield of 1.56%.

One of the world’s largest snack companies. $34 billion in US global net revenues. 40% of its sales come from the high growth developing markets. Trading at 19X forward PE. 15% long term growth. That’s a 1.3X PEG ratio, a big discount to its peer group. Dividend yield of 1.68%.

(A Top Pick June 11/13. Up 29.42%.) About 45% is in emerging markets, which is one of the reasons she likes it. Their main categories are biscuits, candies and chocolate. In developing markets, consumption per capital in those categories is very low so there is lots of growth potential as the consuming class expands.

Diversification into snack foods products. Predictable and it has worked out well for him and made a lot of money. A leader in its space. Quality management team and good financials. Buy and hold for the long term. 1.5% dividend was increased back in the summer. It will go up as time progresses.