Safety Plus Growth

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Yet it is Kraft ( KFT), another of Warren Buffett's holdings, that offers the best combination of safety and growth. The company's broad line of food brands can weather any economic cycle, and Kraft's steady international expansion is morphing the company from a so-so growth story into a pretty solid one. Sales are on track to rise 11% to 12% this year, with two-thirds of that growth coming from emerging markets. The firm now derives roughly 50% of its revenue from abroad and 25% from emerging markets.

Consensus forecasts of a slowing growth rate in 2012 look too pessimistic. After all, Kraft's market share in most of the 60 countries it operates in is fairly small -- and as market share moves up to levels seen in Europe and the U.S., Kraft should see a nice top and bottom-line tailwind. Kraft has more than 50 distinct brands with at least $100 million in sales (11 of the brands, such as Nabisco, Oscar Meyer and Maxwell House, have more than $1 billion in sales).

Shares could get a solid lift in 2012 as investors better understand the value in Kraft's distinct grocery and snack businesses. Those two businesses will be separated in 2012, and investors will need to determine what that means in terms of dividend payouts. Management could decide to trim the payout at each entity to retain cash for growth-oriented initiatives.

So this stock may not stay in the Dow Dogs group, but business separations often yield solid gains for investors that ride out the process. Kraft is one of the top-yielding food and beverage stocks and one of TheStreet Ratings' top-rated food stocks.

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At the time of publication, author had no positions in stocks mentioned.

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