Investopedia: Can Mondelez Live Up To The Sell-Side Hype

Not unlike the apparent love affair between Wall Street and Kraft (Nasdaq:KRFT), Mondelez (Nasdaq:MDLZ) gets quite a bit of love from the sell-side. Many analysts seem convinced that Mondelez can significantly boost its organic growth over a relatively short time and likewise significantly upgrade margins. While I think Mondelez is basically a good company, I worry that the expectations bar is being set at a level where a failure to perform is going to create a real backlash. Even if I use growth expectations beyond the published estimates of the bulls, I can't really get to a point where Mondelez looks cheap today.

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Investopedia: Investors Can't Seem To Get Enough Of Hershey

I have to give credit where it's due – Hershey (NYSE:HSY) is definitely one of the strongest stories in packaged/branded food today. While there are a few relative newcomers showing better volume growth (from a much smaller base), Hershey continues to lead the way when it comes to the large U.S. companies. Better still, Hershey is mixing that growth with strong margin leverage and making a pretty pleasing combo. Although I still think these shares carry a premium valuation, it's hard to argue with a story where management is making so many of the right moves.

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Investopedia: McCormick Continues To Defy Gravity

When I last wrote on McCormick (NYSE:MKC) in October of 2012, I liked almost everything about the company except the valuation on the stock. However, as I've mentioned repeatedly in the past, valuation is no impediment to further appreciation in the short term and McCormick shares have climbed a further 15% from that point (beating the market by more than 7% over that time).

Accordingly, the story on McCormick largely remains the same. While some investors will argue that the valuation of Berkshire Hathaway's (NYSE:BRK.A) and 3G Capital's deal for Heinz (NYSE:HNZ) “proves” that packaged food stocks are undervalued, I don't share that sentiment. The strong volume growth at McCormick is certainly positive, and I like both the company's commanding U.S. share and growth prospects, but today's share price suggests future appreciation potential more suited to bonds than an equity.

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Seeking Alpha: Mondelez's Sugary Valuation Could Cause Wealth Decay

I can understand why investors like Mondelez (MDLZ). The company is not only #1 or #2 in most of its products and markets, but it has been deliberately assembled to address faster-growing markets in the larger packaged food industry. On top of that, this company has some of the highest exposure to emerging markets in the sector. Yet for all of those positives, I do think investors should be careful about what they pay, as expectations for this company are already pretty significant.

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Mondelez's Sugary Valuation Could Cause Wealth Decay

Investopedia: Investors Still Highly Prize Hershey's Consistent Growth

Hershey (NYSE:HSY) may not be a sure thing strictly speaking, but there aren't many companies out there with its history of consistent revenue and dividend growth. International growth is still a valid talking point, as is valuation, but Hershey looks like one of the better volume growth stories in the food sector right now.

Fourth Quarter Results Fueled by Volume and Ads
Hershey had an interesting fourth quarter from a financial perspective. Revenue rose 12% as reported, whereas most investors were looking for 9% growth (including the Brookside deal). Volume jumped 7%, well ahead of expectations of 2-3% growth, and pricing improved over 2%. That makes Hershey one of the strongest volume growth stories in food right now, and perhaps a leading indicator that shoppers have adjusted to years of price resets.

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http://www.investopedia.com/stock-analysis/2013/Investors-Still-Highly-Prize-Hersheys-Consistent-Growth-HSY-MDLZ-NSRGY0205.aspx

Investopedia: Hershey Seriously Outperforms

Financial reports from packaged food companies haven't been all that spectacular lately, as almost every company has had to raise prices to preserve margins and suffer the volume consequences. Hershey (NYSE:HSY) looks like a pretty big exception to that rule, as the company rode serious price leverage to a very strong first quarter 2012. That said, Hershey is not cheap and investors need to ask themselves how much good news is already within the wrapper.

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Investopedia: Has Kraft Saved The Best For Last?

One of the sell-side analysts whom I follow, has made the comment before that Kraft (NYSE:KFT) has long struggled to walk and chew bubblegum at the same time. Now in the wake of the company's announcement that it will split up, it feels a little ironic that the pieces seem to be working together a little better. Although Kraft shares don't represent a huge value today, investors could see trading opportunities around the split, as institutional shareholders choose sides between the higher-growth snack business and the higher-income grocery business.


A Solid Third Quarter 
Maybe it seems strange to get excited that Kraft beat its revenue estimate by 3%, but with a company of this size, where sales data is available on a monthly, or weekly basis, there usually isn't all that much wiggle room. All the same, Kraft reported that revenue rose almost 12% with organic growth of over 8%. Overseas markets are driving good growth as well, as North American revenue was up just a bit more than 4%. One interesting note is that Kraft posted over 1% growth in volume and 7% growth in prices, suggesting that customers are finally accepting higher prices and sticking with brands they like, despite the hikes.


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Investopedia: Leave Campbell Soup On The Shelf For Now

There was no reason to expect that Campbell Soup (NYSE:CPB) was going to fix all that ailed it especially quickly. There is next to nothing to be done about input costs, and likewise little that can be done about weak consumer spending. Product development and innovation are going to take time to bear any fruit, and investors simply have to settle in and accept that this is a company that won't be going anywhere fast for a while yet.


Fourth Quarter Results Really Not So Strong
While Campbell stock may well see a bit of a relief rally since the company did surpass the results preannounced at its analyst day, the full context of the numbers is not so great. Revenue rose 6%, and that did beat analyst expectations, but organic growth was just 1%, and volume was down 2%.


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Neogen Is No Bad Egg

There seems to be a sad inevitability to food safety scares in the United States. While the latest outbreak revolved around contaminated chicken eggs, it has not been all that long since numerous people were sickened by bad peanut butter, jalapeno peppers, ground meat or scallions. In fact, the CDC estimates that one in four Americans experiences food poisoning every year (those "24-hour flu" cases are far more likely to be food poisoning). 

Given the huge potential consequences to a brand or business being associated with food poisoning, it may be surprising that food safety testing is not a larger business in the United States. Yet, it is big enough to make Neogen (Nasdaq:NEOG) an interesting business. 


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http://stocks.investopedia.com/stock-analysis/2010/Neogen-Is-No-Bad-Egg-NEOG-PFE-ABT-BIO-HSY-GPRO0928.aspx

Please note - a mistake was made in the editing process and an editor accidentally replaced Merck KGaA with Merck (MRK) as the owner of Millipore. I've pointed this out and it should be corrected shortly. 

General Mills Succeeds In A Shaky Sector

Brands are funny things. Everybody knows that they have value, but nobody is ever really sure just how much value they have. Looking across the packaged food sector these days, it seems like the companies with the winning brands are doing quite well for themselves. That is one possible explanation, then, for why General Mills (NYSE:GIS) continues to grow while its rivals struggle with weak volumes. 

The Good News
To be sure, General Mills' fiscal first quarter results were nothing to be framed and put on the wall; sales growth was about 1.3%, as higher volumes fueled the growth. Cereals and yogurt were leaders in the U.S. retail business, helping to offset some weakness in the Pillsbury lines. Even if sub-2% growth is not a cause for celebration, General Mills does deserve praise and respect for continuing to grow at a time when rivals like Del Monte Foods (NYSE:DLM), Kellogg (NYSE:K) and ConAgra (NYSE:CAG) are having a much harder time of it. 


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Chocolate 2.0

Perhaps humanity has seen the first step towards a long-held dream. No, not a manned mission to Mars, a cure for cancer or a solution for world peace; those would pale in comparison to the promise of healthier, cheaper and tastier chocolate. 

Scientists from Mars (the chocolate company), the U.S. Department of Agriculture and IBM (NYSE:IBM) have announced that they successfully sequenced the cacao plant. Although this is merely the first step, it opens up the door to a lot of potential changes. Though there will no doubt be howls of protests about the grim spectre of "Franken-chocolate" ruining the candy aisle forever more, agricultural companies and chocolate producers could ultimately forge a more sustainable crop and a healthier, tastier end-user product. 


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