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.


Marc Courtenay is the founder and owner of Advanced Investor Technologies, LLC, as well as the publisher and editor of

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