Zacks.com releases the latest Analyst Interview. Today’s
interview is with senior analyst Steven Ralston, who discusses Colgate-Palmolive
(NYSE: CL), Estee Lauder (NYSE: EL), Kraft Foods (NYSE:
KFT), Berkshire Hathaway (NYSE: BRK.A) and Altria Group
(NYSE: MO).
Get the most recent insight from Zacks Equity Research with the free
Profit from the Pros newsletter: http://at.zacks.com/?id=2678.
Are there certain types of consumer staples companies that should
trend better than others these days?
Generally speaking, food companies generate earnings growth at a
mid-to-high single-digit rate. Beverage companies, however, are
structurally able to grow faster at the high single-digit to low
double-digit rate. But, personal product companies can grow earnings a
percentage point or two above beverage companies. The earnings of these
personal product companies, like Colgate-Palmolive (NYSE: CL) and Estee
Lauder (NYSE: EL), have the potential to stand out during a
recession.
On which companies are your strongest Buy recommendations?
Though Kraft Foods (NYSE: KFT) has an above-average exposure to
commodities, including cheese, coffee, meats, energy, and packaging,
management is implementing a three-year Turnaround Plan and is focused
on brand-building and new product initiatives. The program enabled the
company to generate organic revenue growth of 3.6%, 4.1%, 6.2%, and 6.2%
in first, second, third, and fourth quarters of 2007, respectively. This
is the best organic top-line growth generated by the company since 2001.
In the first quarter of 2008, organic sales growth accelerated again to
an 8% rate. Obviously, this has not gone unnoticed by astute investors.
Six weeks after we initiated our Buy opinion, Warren Buffett's Berkshire
Hathaway (NYSE: BRK.A) reported that it had acquired an 8.6% stake
in Kraft Foods and became the company's largest shareholder. And just
yesterday, Berkshire Hathaway reported that it had acquired another 5.9
million shares in the first quarter of 2008.
Since being spun-off from Altria Group (NYSE: MO) in March 2007,
Kraft’s management has become more focused on
the company’s operational challenges. In order
to strengthen the company’s presence in
various categories and to enhance the company’s
position in both developed and developing markets, Kraft has acquired
several of companies. Additionally, management has focused the portfolio
of brands through divestitures.
Kraft Foods generates strong cash flow that allows management to
re-invest in the company and return value to shareholders. Last year,
the Board authorized a $5 billion share repurchase program, which will
bolster earnings growth.
About Zacks Equity Research
Zacks Equity Research provides the best of quantitative and qualitative
analysis to help investors know what stocks to buy and which to sell for
the long-term.
Continuous coverage is provided for a universe of 1,150 publicly traded
stocks. Our analysts are organized by industry which gives them keen
insights to developments that affect company profits and stock
performance. Recommendations and target prices are six-month time
horizons.
Zacks Profit from the Pros e-mail newsletter provides highlights of the
latest analysis from Zacks Equity Research. Subscribe to this free
newsletter today by visiting http://at.zacks.com/?id=2679.
About Zacks
Zacks.com is a property of Zacks Investment Research, Inc., which was
formed in 1978 by Leonard Zacks. As a PhD in mathematics Len knew he
could find patterns in stock market data that would lead to superior
investment results. Amongst his many accomplishments was the formation
of his proprietary stock picking system; the Zacks Rank, which continues
to outperform the market by nearly a 3 to 1 margin. The best way to
unlock the profitable stock recommendations and market insights of Zacks
Investment Research is through our free daily email newsletter; Profit
from the Pros. In short, it's your steady flow of Profitable ideas
GUARANTEED to be worth your time! Register for your free subscription to
Profit from the Pros at http://at.zacks.com/?id=4581.
Visit http://www.zacks.com/performance
for information about the performance numbers displayed in this press
release.
Disclaimer: Past performance does not guarantee future results.
Investors should always research companies and securities before making
any investments. Nothing herein should be construed as an offer or
solicitation to buy or sell any security.
