Playing Hot Dog Stocks Hilshire, Kraft for Memorial Day

NEW YORK (TheStreet) -- Memorial Day is the unofficial start of hot dog season.

Get out the grill. Go to a ballgame. Go to a beach or a park and start a fire. Or just shut the kids up with the easy meal solution of meat in tube form.

The two largest hot dog producers are Hillshire Brands' (HSH) BallPark Franks and Kraft's (KRFT) Oscar Meyer and they make a great contrast for investors. They're close in size, with BallPark having sales of $565 million and Oscar Meyer bringing in $523 million last year. 

Kraft is conservative, focused on returning cash to shareholders. Hillshire is aggressive, focused on growth.

Kraft started the hot dog season with some unpleasant headlines, a recall of 96,000 pounds of wieners. It wasn't really a health scare, more a case of mislabeling cheese dogs as meat ones, but it is emblematic of a key difference between the two companies.

Kraft is primarily a dairy company, with nine different cheese brands including Philadelphia Cream Cheese, Breakstone cottage cheese, Polly-O mozzarella and Velveeta processed cheese.

Hillshire, by contrast, is mainly a meat company. Hillshire Farms is deli meats. Jimmy Dean is sausages. Aidelis is chicken sausage. Gallo Salame is, well, salami. State Fair wraps hot dogs in corn batter and produces corn dogs. Even its Sara Lee bakeries have a deli meat brand.

Oscar Meyer is one of 30 brands run by Kraft, which had revenue of $18.2 billion last year and net income of $2.71 billion, or $4.83 per share. Hillshire lists 15 core brands, and turned in revenue last year of $2.9 billion, with $184 million in profit, or $1.88 per share.

It's in their boardrooms that you'll find the biggest difference.

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