10 Cheap New Stocks To Buy Right Now

8. WK Kellogg Co (NYSE:KLG)

Number of Hedge Fund Holders: 21

Forward P/E ratio as of January 25: 8.94

Market Capitalization: $1.46 billion

WK Kellogg Co (NYSE:KLG) is a food company known for its iconic cereals, which include Frosted Flakes, Special K, and Froot Loops. It operates in North America and manufactures, markets, and distributes a range of ready-to-eat cereals.

On January 8, TD Cowen downgraded the company to Sell from Hold, also lowering its price target from $18 to $16. Despite acknowledging the company’s potential to improve its profit margins, TD Cowen cited concerns about the breakfast cereal market, potential supply chain disruptions due to modernization, and the impact of increased regulatory scrutiny related to health and wellness initiatives. The firm now projects organic growth to decline by 1.5% in both years, which is lower than the previous consensus estimates of -0.6% and -1.0%, respectively.

However, earlier, the Q3 2024 earnings revealed that the Core 6 brands, which represent ~70% of the company’s sales drive the majority of its growth. This segment includes Frosted Flakes, Raisin Bran, and four other major brands. Five of the six brands maintained or gained market share during the period. Improved supply chain efficiency boosted in-store execution and increased sales across the segment. WK Kellogg Co (NYSE:KLG) will continue to enhance commercial efforts, such as targeted promotions and the “Special for a Reason” Special K campaign, to sustain this growth. Therefore, analyst concerns about supply chain disruptions seem to be dealt with by the impact of this improved supply chain efficiency.