12 Undervalued Defensive Stocks for 2025

7. The Kraft Heinz Company (NASDAQ:KHC)

Forward P/E: 9.74

Number of Hedge Fund Holders: 38

The Kraft Heinz Company (NASDAQ:KHC) manufactures and distributes food and beverages worldwide. Its offerings include cheese and dairy products, meals, tomato products, condiments, meats, sauces, refreshment beverages, and more. Its geographical segments of operation include North America and  International Developed Markets.

One of the primary reasons analysts are bullish on The Kraft Heinz Company (NASDAQ:KHC) is its solid 5.3% dividend yield. This rate is well above its industry group average of around 4%. This positions the company as an attractive opportunity.

Despite a rise in budget-conscious consumers, The Kraft Heinz Company (NASDAQ:KHC) is generating financial efficiencies to support profitability margins. Its fiscal Q3 2024 adjusted earnings per share (EPS) grew by 4.2%, reflecting stability. Furthermore, the changing consumer spending dynamics due to a robust economy and interest rate cuts by the Fed are expected to positively affect the company’s operations. It is supporting these trends by focusing on executing its strategic pillars to generate strong cash flow and drive profitable growth.

In addition, Warren Buffett, through Berkshire Hathaway, is the largest shareholder of The Kraft Heinz Company (NASDAQ:KHC), holding 326 million shares. This translates to around 27% of the entire company and reflects confidence in its long-term outlook.

Mairs & Power Growth Fund stated the following regarding The Kraft Heinz Company (NASDAQ:KHC) in its Q3 2024 investor letter:

“We added The Kraft Heinz Company (NASDAQ:KHC) to the Fund in the quarter. Kraft Heinz is a leading global food company that possesses a portfolio of iconic brands, including its eponymous ketchup brand. The company has undergone an operational transformation focused on driving efficiency gains in supply chain, manufacturing and distribution. These efficiency gains have fueled increased investments in technology, automation, innovation and marketing, which should ultimately drive more consistent organic revenue growth and high single digit earnings per share growth. We expect above-average long-term returns, buoyed by consistent free cash flow generation, opportunistic share repurchases and an attractive 4-5% dividend yield. A modest current valuation affords an ample margin of safety.”