Kraft Foods Group Inc (KFT), AbbVie Inc (ABBV), Zoetis Inc. (ZTS): Three Stocks to Profit from Zombie Apocalypse Thinking

Davenport downgraded it to neutral from buy on April 15. Analysts see 6.20% five year growth. Their opinions have been constant since the IPO with four strong buys, eight buys, and eight holds. It is a slower grower than Mondelez which at 12.2% is almost double the analyst expected growth rate.

All the defensive consumer staples have been running, especially ones like Kraft (absolutely no relation) with such a high yield. The PEG of 2.96 shows it’s somewhat overvalued here. But that gives you a chance to get a higher yield if it pulls back. That yield has a very sustainable payout ratio of 18%. The yield is also one of the highest among food manufacturers.

Kraft Foods Group Inc (NASDAQ:KRFT) is hanging here near its median price target of $51, so there’s no hurry nor much upside right here. The point is to hold on for that yield especially if you can get it on sale (maybe with a double coupon).

Kraft Foods Group Inc (NASDAQ:KRFT) should continue to benefit  from its strong brand loyalty as it was able to raise prices without too much consumer squawking last year.  They’ve also been rolling out interesting new products like their MiO liquid concentrate, Fresh Takes, cheese based seasoned coating mixes, and Cool Whip frosting.  Investors and analysts will find out exactly how much when they report 2013 Q1 earnings on May 2.

As you can probably guess Kraft’s biggest threat to margins is their commodity costs. Marketing is also a big expense and expected to rise this year to support these new products.

The Zombie takeaway

Kraft Foods Group Inc (NASDAQ:KRFT) is the leader when it comes to yield but is the slowest grower. AbbVie Inc (NYSE:ABBV) also has a high yield and a reasonable P/E. Its move into underserved medical conditions with specialized drugs is promising. Zoetis Inc. (NYSE:ZTS) is the beneficiary of two trends: the worldwide demand for animal protein and our love of pets.

All of these can be strong and long holds for the investor who can delay his gratification in a hurry up zombie world.

The article Three Stocks to Profit from Zombie Apocalypse Thinking originally appeared on Fool.com and is written by AnnaLisa Kraft.

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