We came across a bullish thesis on Mondelez International, Inc. (MDLZ) on Rijnberk InvestInsights’ Substack by Daan Rijnberk. In this article, we will summarize the bulls’ thesis on MDLZ. Mondelez International, Inc. (MDLZ)’s share was trading at $60.02 as of Dec 18th. MDLZ’s trailing and forward P/E were 21.28 and 17.51 respectively according to Yahoo Finance.
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Mondelez International represents a compelling investment opportunity, even though it lacks the exciting growth narratives often associated with high-growth or tech-driven companies. As a global leader in the consumer staples sector, Mondelez has built a resilient business around iconic brands like Oreo, Cadbury, Milka, and Ritz. It consistently delivers low-to-mid single-digit revenue growth and mid-to-high single-digit EPS growth, offering investors a steady and dependable performance throughout economic cycles. While these metrics might seem unremarkable, Mondelez’s ability to outgrow peers and capture market share makes it a standout in its industry.
The company operates across diverse geographical markets, with 39% of its revenue generated from emerging markets. These regions have shown remarkable growth, with a five-year CAGR of 13%, driven by rising incomes and increasing snacking trends. In contrast, developed markets provide a stable foundation through strong consumer loyalty and Mondelez’s dominance in key categories, such as biscuits (17.5% global market share) and chocolate (13% global market share). This balance between high-growth regions and steadily developed markets positions Mondelez for sustained performance.
Snacking trends continue to grow globally, with research showing that 88% of consumers snack regularly and 76% of snackers prefer familiar brands. Mondelez’s billion-dollar brands, such as Oreo, Milka, and Cadbury, capitalize on this loyalty, creating a durable competitive advantage. The company’s execution over recent years has been exceptional, resulting in market share gains and further entrenching its leadership in high-growth snacking categories.
Mondelez pairs its stable growth with strong shareholder returns. Over the last five years, it has reduced outstanding shares by 18% through buybacks and consistently increased dividends at a high single-digit rate, supported by a payout ratio below 50%. The current dividend yield of over 3%, combined with this growth, adds a layer of appeal for income-focused investors.
Despite these strengths, Mondelez’s shares have underperformed in recent quarters, falling 13.5% YTD and underperforming the broader market over the last five years. This lag can be attributed to sector-wide pressures on consumer staples and rising cocoa prices, which surged over 340% from early 2022 to 2024. These price increases have strained Mondelez’s margins and sales volumes, as higher product costs dampen consumer demand. However, the resulting share price correction appears overdone, particularly as the company has streamlined operations and focused on core categories in recent years.
At just 18.5x next year’s earnings, Mondelez trades at a 15% discount to its five-year average and a 10% discount to the sector median. Its PEG ratio of 2x is a 25% discount to the sector, despite Mondelez’s superior growth prospects. With cocoa price pressures expected to subside by 2026, a return to a 21x earnings multiple would yield an end-of-2026 target price of $83, offering a 13% annualized return, or over 16% when including dividends. This makes Mondelez a highly attractive investment for those seeking defensive stability with meaningful upside potential.
Mondelez International, Inc. (MDLZ) is not on our list of the 31 Most Popular Stocks Among Hedge Funds. As per our database, 51 hedge fund portfolios held MDLZ at the end of the third quarter, which was 47 in the previous quarter. While we acknowledge the risk and potential of MDLZ as an investment, our conviction lies in the belief that some AI stocks hold greater promise for delivering higher returns, and doing so within a shorter timeframe. If you are looking for an AI stock that is more promising than MDLZ but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
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Disclosure: None. This article was originally published at Insider Monkey.