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Kraft Heinz Co Stock Breaking Out: Why It’s Worth a Look

Tuesday, June 9, 2020 | Sean Sechler
Kraft Heinz Co Stock Breaking Out: Why It’s Worth a Look

When it comes to finding companies to invest in that provide essential goods and services, you can’t go wrong with consumer staples. These companies produce the kinds of products that people buy on a consistent basis regardless of what the economy is doing. Since the demand for their products is essentially fixed, you can expect modest growth with relatively safe preservation of your capital by investing in them. This is one of the more attractive reasons to look into the consumer staples sector at this time.

Kraft Heinz Co (NASDAQ:KHC) is a consumer staple stock that is currently breaking out to 52-week highs. The 150-year-old American food company has been generating strong sales throughout the global pandemic and appears to be poised for a run higher in the coming months, particularly with the recent analyst upgrades. Although shifting consumer habits towards healthier food brands has scared some investors away from the company, there are plenty of positives with Kraft Heinz that you should be excited about. Let’s take a look at why Kraft Heinz stock is worth a look for your portfolio or a short-term trade below.

Relative Safety

In today’s market, there is always value in finding companies that offer security regardless of what is going on in the world. Kraft Heinz Co was long considered to be a defensive stock that provided investors with safety during periods of economic uncertainty or recessions until the company experienced tough times over the last few years. However, things are looking brighter for Kraft Heinz Co all of the time and the demand for their products remains high. This is one of the big reasons why you should be interested in the classic American food company today.

Consumer staple stocks are noncyclical, which means that their businesses can still typically generate profits even in a fragile economy. Kraft Heinz has a solid noncyclical business model that can thrive in any economic condition. There aren’t very many companies that offer this kind of safety in today’s market, and one could even argue that if the US is indeed headed into a recession, the demand for Kraft Heinz products will go up.

Iconic Brand Names

We all know how iconic the products that Kraft Heinz Co produces are. Heinz Ketchup is the go-to brand for ketchup in the United States while its other products consistently find their way into people’s refrigerators on a regular basis. Brands like Oscar Mayer, Kraft, Planter’s Peanuts, and Philadelphia are all regular purchases for many Americans, which bodes well for the future of the company.

As an investor, you know that these brand names are well-known and steadily in demand. Just take a look at their Net Sales of $6.2 billion during Q1, which was a year-over-year increase of 3.1%, to see how strong these products continue to sell. Although a lot of that growth can be attributed to the coronavirus panic buying, the fact that you can bank on solid sales regardless of what is going on in the world makes Kraft Heinz an attractive investment.

Solid Dividend

Many value investors that are interested in consumer staple stocks like them because of the steady dividends that they have to offer. Kraft had a rough 2019 that led the company to slash its dividend payments by roughly a third, but it doesn’t appear that more cuts are on the way at this point. The dividend cut was bad news last year, but it seems that the company’s earnings have stabilized and it is still offering a very attractive dividend yield.

It’s always a good idea to be careful when chasing high dividend yields, but Kraft Heinz is about as safe of a bet as you can make thanks to their proven business model. The stock has a very attractive dividend yield of 4.75% (as of this writing), which is much higher than other consumer staple stocks.

Absolutely Worth a Look

Don’t be surprised if the recent positive momentum continues taking Kraft Heinz Co upwards in the coming weeks. The stock has a lot working in its favor and broke out through its 52-week high with solid volume. Kraft Heinz Co is up around 5% for the year and has a lot of room to run if it can close above and hold the $35 dollar per share price level. Combine that with the strong dividend payouts, analyst upgrades, diverse product line, and relative safety that Kraft Heinz Co has to offer and you have a stock that is absolutely worth monitoring in the coming weeks.

 

 

 

 

 

 

 

 

Companies Mentioned in This Article

CompanyBeat the Market™ RankCurrent PricePrice ChangeDividend YieldP/E RatioConsensus RatingConsensus Price Target
Kraft Heinz (KHC)2.0$31.44-1.7%5.09%-209.60Hold$34.37
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Most people know that brokerage rankings are overstated because of pressure from publicly-traded companies. No investor relations person wants to see "hold" and "sell" ratings issued for their stock. In reality, a "buy" rating really means "hold." "Hold" ratings really mean "sell" and "sell" ratings mean get out while you still can.

If Wall Street's top analysts are consistently giving "hold" and "sell" ratings to a stock, you know there's a serious problem. We've compiled a list of the companies that Wall Street's top equities research analysts are consistently giving "hold" and "sell" ratings too. If you own one of these stocks, consider getting out while there's still time.

This slide show lists the 20 companies that have the lowest average analyst recommendations from Wall Street's equities research analysts over the last 12 months.

View the "20 Stocks to Sell Now".

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