Mondelez International Inc (NASDAQ:MDLZ) is the global snacks business that was part of Kraft Foods. The Kraft Foods breakup led to Mondelez – the global snack company – and Kraft Foods Group – the North American grocery business. Mondelez has the highest beta of the five stocks listed at 0.6, and one of the lowest dividend yields at 2.1%. Still, we are encouraged by Mondelez’s solid exposure to international markets, with over 80% of 2012 revenues expected to be derived from outside of the U.S. Interestingly, Warren Buffett sold off nearly 50% of his stake last quarter (check out Warren Buffett’s newest picks).
General Mills, Inc. (NYSE:GIS) is another defensive stock with little correlation to the broader market, with a beta of 0.2. General Mills also pays a dividend that yields 3.3%. One of General Mills’ best growth opportunities is in the U.S. greek yogurt market. Although General Mills could be a solid addition to any portfolio for correlation reasons, we are not encouraged by its growth or valuation prospects. The stock trades at a PEG of 2.0. Billionaire Ray Dalio of Bridgewater Associates did take a new stake in General Mills last quarter (see Ray Dalio’s biggest bets), so there’s some support from the smart money.
PepsiCo, Inc. (NYSE:PEP), meanwhile, has been seeing margin compression thanks to increased spending on advertising in an effort to regain market share in the U.S. The beverage company currently has a strong position in international markets – in part due to its Wimm-Bill-Dann acquisition – but domestic market share isn’t where most Pepsi bulls would like it to be. On the bright side, shares do pay one of the industry’s stronger dividends with a yield of 3.2%. Billionaire Ken Fisher – founder of Fisher Asset Management – is one of the top-name Pepsi investors (check out Ken Fisher’s newest picks).
Kellogg Company (NYSE:K) also pays a solid dividend yield of 3.2% and is seeing solid revenue contributions from its Pringles business. The Pringles acquisition should continue to help Kellogg shift more toward snacks and break into international markets. The Pringles line is expected to generate 10% of Kellogg’s revenues for next year, but for now the valuation of the food company appears high. The stock trades at 17x earnings and its PEG comes in close to 2.5. Ken Griffin – founder of Citadel Investment Group – upped his stake in the consumer staples company by over 4,000% last quarter (check out Ken Griffin’s newest picks).
In short, we believe that Hershey is one of the top packaged food stocks that is becoming more defensive despite its chocolate-heavy product portfolio. Being the global leader in sugar-based confectionery products makes Hershey a solid recession-resistant stock. For more related coverage, continue reading below:
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