This Day On The Street
Continue to site right-arrow
ADVERTISEMENT
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here
Stocks Under $10 with 50-100% upside potential - 14 days FREE!

How to Capitalize on Kellogg's Takeover Rumors

Stocks in this article: K

NEW YORK (TheStreet) -- Kellogg's (K - Get Report) shares rose 6% Thursday following speculation that the company may be a takeover target. Is this a likely scenario for the branded cereals and snacks company?

With a market capitalization of around $23 billion, any bidder would need big pockets. Looking back through history, one sees that bigger deals in the branded consumer goods sector have occurred.

In February 2013, a consortium including Warren Buffett bought Heinz for just over $28 billion. When the deal was announced, Buffett placed great emphasis on the strength and sustainability of the Heinz brands. A similar case could be made with Kellogg's. Few households in North America or Northern Europe will not have a packet of at least one of the company's core brands such as Corn Flakes, Special K, Pringles or Nutri-Grain in their cupboards.

Despite good brands, recent corporate results from the company have disappointed, with company guidance suggesting that "underlying internal operating profit" is expected to rise between 0% to 2% in 2014. Pretty dull.

This low profitability increase centers on consumers around the world impacted by austerity downtrading to cheaper supermarket generic brands or just simply consuming less. Kellogg's has hiked advertising and marketing to try to battle back. It has launched a cost-cutting campaign called "Project K" that will send about 7% of the company's workforce packing.

1 of 2

Check Out Our Best Services for Investors

Action Alerts PLUS

Jim Cramer and Stephanie Link reveal their investment tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
Quant Ratings

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
Stocks Under $10

Jim Cramer's protégé, David Peltier, uncovers low dollar stocks with extraordinary upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
Try it NOW
Try it NOW
Try it NOW

Check Out Our Best Services for Investors

Dividend Stock Advisor

Jim Cramer's protégé, David Peltier, identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Updates with exact steps to take - BUY, HOLD, SELL
Trifecta Stocks

Every recommendation goes through 3 layers of intense scrutiny—quantitative, fundamental and technical analysis—to maximize profit potential and minimize risk.

Product Features:
  • Model Portfolio
  • Intra Day Trade alerts
  • Access to Quant Ratings
Options Profits

Our options trading pros provide over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.

Product Features:
  • Actionable options commentary and news
  • Real-time trading community
Try it NOW
Try it NOW
Try it NOW
To begin commenting right away, you can log in below using your Disqus, Facebook, Twitter, OpenID or Yahoo login credentials. Alternatively, you can post a comment as a "guest" just by entering an email address. Your use of the commenting tool is subject to multiple terms of service/use and privacy policies - see here for more details.
Submit an article to us!

Markets

DOW 17,672.60 -141.38 -0.79%
S&P 500 2,051.82 -11.33 -0.55%
NASDAQ 4,757.8790 +7.4820 0.16%

Partners Compare Online Brokers

Free Reports

Free Newsletters from TheStreet

My Subscriptions:

After the Bell

Before the Bell

Booyah! Newsletter

Midday Bell

TheStreet Top 10 Stories

Winners & Losers

Register for Newsletters
Top Rated Stocks Top Rated Funds Top Rated ETFs