12. The Kraft Heinz Company (NASDAQ:KHC)
Upside Potential as of December 13: 14.32%
The Kraft Heinz Company (NASDAQ:KHC) is an Illinois-based food company that specializes in a wide range of snacks and beverages. Formed through the merger of Kraft and Heinz, two iconic names in the food industry, the company boasts a strong portfolio of brands, an extensive distribution network, and effective marketing capabilities, making it a trusted partner for retailers globally. Although the merger didn’t yield the anticipated results, the company is now pursuing a new strategy, which involves eliminating underperforming products and placing greater emphasis on its key offerings.
Mairs & Power also highlighted The Kraft Heinz Company (NASDAQ:KHC)’s transformation in its Q3 2024 investor letter. Here is what the firm has to say:
“We added The Kraft Heinz Company (NASDAQ:KHC) to the Fund in the quarter. Kraft Heinz is a leading global food company which possesses a portfolio of iconic brands, including its eponymous ketchup brand. The company has been undergoing 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.”
In the third quarter of 2024, The Kraft Heinz Company (NASDAQ:KHC) reported revenue of $6.38 billion, marking a 2.85% decline from the same period last year. However, its gross profit margin improved by 20 basis points, reaching 34.2%. The company remained focused on investing in marketing, research and development, and technology to provide value-driven solutions for consumers and foster future revenue growth. These initiatives are backed by its proven ability to streamline operations and generate strong cash flow. In addition, the company is dedicated to expanding both its well-established and emerging food and beverage brands globally.
The Kraft Heinz Company (NASDAQ:KHC) reported a solid cash position for the most recent quarter. Its year-to-date operating cash flow reached $2.8 billion, reflecting a 6.7% increase compared to the same period last year. The company generated $2 billion in free cash flow, marking a 9.7% year-over-year growth. Additionally, it returned $1.5 billion to shareholders through dividends during the first nine months of the year. The company currently offers a quarterly dividend of $0.40 per share and has a dividend yield of 5.01%, as of December 13.
Insider Monkey’s database of Q3 2024 showed that 38 hedge funds held stakes in The Kraft Heinz Company (NASDAQ:KHC), compared with 43 in the previous quarter. The overall value of these stakes is more than $12 billion. Warren Buffett’s Berkshire Hathaway was the company’s leading stakeholder in Q3.