This Day On The Street
Continue to site
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

Kraft Foods Offers Delicious Products and Tempting Dividend



It's plain to see why Kraft continues to post the kind of key financial numbers that makes its rivals drool with envy. Its trailing 12-month operating margin at the end of 2013 was nearly 27%.

As of Dec. 28, 2013, its Return on Equity was an amazing 62% and its revenue per share was $30.67, equaling annual revenue of $18.22 billion, according to the company's financial report.

When it reports its first quarter 2014 numbers on May 1 after the market closes I'm expecting similar EPS numbers from the year-ago quarter and a slight drop in revenue.

Any disappointing results may allow shares of Kraft to retreat towards its Feb. 5 low price of $50.54. That would be an 11% drop from the closing price on April 16 of $56.74. From my vantage point that is an unlikely scenario, but a 5% drop wouldn't surprise me if the May 1 numbers fall short.

If the company maintains its annual dividend of $2.10 it may serve as support for shares of Kraft once the dividend yield-to-price exceeds the 4% level. That could place a floor under the stock of around $53, which I believe is a promising entry level for new buyers or those who've been waiting to scoop up shares on sale.

The 52-week high of $58.76 would be my initial 12-month price target. Based on Kraft's forward guidance to be delivered on May 1, that target may be low. My research indicates accelerating earnings growth during the second and third quarters of 2014. Depending on what we learn from the conference call a $60 price target might be more realistic.

Things could end up nicely for shareholders who wait to buy at lower price levels to collect close to a 4% dividend while patiently waiting for better quarterly outcomes later this year. Even at $56 per share the dividend yield-to-price is a tempting 3.75% assuming the company doesn't change its dividend payout.

If you're not already a Kraft Foods shareholder consider adding it to your wish list at a price that makes sense to you.

At the time of publication the author had no position in any of the stocks mentioned.

This article represents the opinion of a contributor and not necessarily that of TheStreet or its editorial staff.

Google+



Marc Courtenay is the founder and owner of Advanced Investor Technologies, LLC, as well as the publisher and editor of www.ChecktheMarkets.com.
2 of 2

Check Out Our Best Services for Investors

Action Alerts PLUS

Portfolio Manager Jim Cramer and Director of Research Jack Mohr 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

David Peltier uncovers low dollar stocks with serious upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
14-Days Free
Only $9.95
14-Days Free
Dividend Stock Advisor

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
SYM TRADE IT LAST %CHG
KRFT $88.19 -0.12%
AAPL $125.62 -0.30%
FB $87.25 -0.34%
GOOG $525.16 0.44%
TSLA $266.66 -4.70%

Markets

DOW 17,776.91 +93.33 0.53%
S&P 500 2,081.34 +12.58 0.61%
NASDAQ 4,997.4590 +5.5190 0.11%

Free Reports

Top Rated Stocks Top Rated Funds Top Rated ETFs