The Zacks Analyst Blog Highlights: General Mills, Kellogg, Kraft Foods Group, Pepsico and Dunkin' Brands Group
CHICAGO, July 8, 2014 /PRNewswire/ -- Zacks.com announces the list of stocks featured in the Analyst Blog. Every day the Zacks Equity Research analysts discuss the latest news and events impacting stocks and the financial markets. Stocks recently featured in the blog include the General Mills, Inc. (NYSE:GIS-Free Report), Kellogg Company (NYSE:K-Free Report), Kraft Foods Group, Inc. (Nasdaq:KRFT-Free Report), Pepsico, Inc. (NYSE:PEP-Free Report) and Dunkin' Brands Group, Inc. (Nasdaq:DNKN-Free Report).
Today, Zacks is promoting its ''Buy'' stock recommendations. Get #1Stock of the Day pick for free.
Here are highlights from Monday's Analyst Blog:
Hungry? 3 Stocks to Munch On
The Snacking Boom
The proportion of Americans who consume snacks three or more times a day increased 56% by 2010, as indicated by the latest official figures. A much larger percentage of consumers have been snacking, compared with just 10% in the late 70s and 20% in the 90s.
A survey conducted in 2013 by consumer insights company Hartman Group revealed that 48% of Americans skipped meals a minimum of three times a week. Additionally, 63% decide what to eat less than an hour before meals.
Such trends are being mirrored by the composition of food sales. Data from market intelligence company Euromonitor International shows that U.S. retail sales of soups grew at an annual average of 0.4% during 2008-13. Pasta sales increased 1.3% annually in the U.S. during the same period.
On the other hand, sales of nuts, snack bars and chips increased 7.8%, 5.4% and 4.2%, respectively. It seems the very perception of snacking has changed. Once considered to be an occasional indulgence, a snack has now become anything portable and nutritious which either complements a meal or replaces it altogether.
Industry Responds
Changes in consumer preferences are being reflected in the sales of companies manufacturing food products. In the case of diversified firms, some divisions are witnessing growth while others contract. For instance, revenue for the U.S. snacks division of General Mills, Inc. (NYSE:GIS-Free Report) increased 6% during the fiscal year ended May 25. During the same period, revenue at its U.S. meals division shrank by 4%.
But this phenomenon has skewed the pitch for more specialized companies like Kellogg Company (NYSE:K-Free Report). Overall sales for the breakfast cereal maker declined 3.1% during the last quarter. Now, the company is trying to keep up with changing eating behavior with its "To Go" range of breakfast products which include strawberry shakes.
Another option is to offer smaller portions of existing products. Kraft Foods Group, Inc. (Nasdaq:KRFT-Free Report) has recently launched a range of what it calls "portable protein packs" as part of the Oscar Mayer line. Pickles are now available in smaller portion sizes and General Mills recently launched a line of protein bars.
Overall, breakfast habits have undergone the biggest change. A 2014 survey by market research company IRI revealed that over 33% of Americans consume a snack early in the morning and 55% eat mid-morning snacks. This is respectively up from 14% in 2010 and 45% from 2009.
This phenomenon has forced diversified conglomerates like Pepsico, Inc. (NYSE:PEP-Free Report) to change their offerings. The company's Quaker division, renowned for its oatmeal, has begun test marketing breakfast shakes.
The trend being observed among consumers is to consume smaller and healthier portions. The idea is to increase convenience and lose weight by reducing the size of servings and their individual calorie count.
But Hartman's 2013 survey reveals that this kind of self-control vanishes by nightfall, when candy and ice cream still call the shots. This is when the likes of Baskin Robbins, owned by Dunkin' Brands Group, Inc. (Nasdaq:DNKN-Free Report), takeover. More significantly, they don't have to change their product portfolio at all.
Our Choices
Companies keeping pace with changing customer preferences are the best bet in this scenario. Below we present three stocks which possess the potential to grow appreciably in this environment, each of which also has a good Zacks Rank.
Kraft Foods Group, Inc. is one of the largest consumer packaged food and beverage companies in North America. It sells branded products in beverages, cheese, coffee, refrigerated meals and grocery categories, mainly across the U.S. and Canada.
Effective from Jul 1, 2013, its reportable segments became Beverages, Cheese, Refrigerated Meals, Meals & Desserts, Enhancers & Snack Nuts, and Canada.
Kraft Foods holds a Zacks Rank #3 (Hold) and has expected earnings growth of 22%. The forward price-to-earnings ratio (P/E) for the current financial year (F1) is 18.97.
Pepsico, Inc. is the leading global food and beverage company marketing hundreds of brands in more than 200 countries. Its principal businesses include: Frito-Lay snacks, Pepsi-Cola beverages, Gatorade sports drinks, Tropicana juices and Quaker foods.
Pepsi holds the number one position in global snacks business with popular brands like Doritos, Cheetos and Lay's. Around half of PepsiCo's sales come from snacks and the other half from beverages. PepsiCo's strong and growing snacks business has largely offset its sluggish beverages business.
Currently the company holds a Zacks Rank #3 (Hold) and has expected earnings growth of 3.9%. It has a P/E (F1) of 19.83.
Dunkin' Brands Group, Inc. owns, operates, and franchises quick service restaurants worldwide. It serves hot and cold coffee and baked goods, as well as ice cream. It owns the Dunkin' Donuts and Baskin-Robbins brands. Dunkin' Brands Group is headquartered in Canton, Massachusetts.
The ice cream brand is available at nearly 2,500 outlets across the U.S. Earlier this year, Baskin-Robbins tied up with Boardwalk Frozen Treats to distribute its products to major grocery retailers.
Apart from a Zacks Rank #3 (Hold), Dunkin' Brands has expected earnings growth of 17.60%. It has a P/E (F1) of 25.59.
It remains to be seen whether this is just a passing phase for the food products sector. But recent data suggests that those stocks which have taken cognizance of these changes will hold their ground. This is why these stocks would make good additions to your portfolio.
Today, Zacks is promoting its ''Buy'' stock recommendations. Get #1Stock of the Day pick for free.
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.
About Zacks
Zacks.com is a property of Zacks Investment Research, Inc., which was formed in 1978. The later formation of the Zacks Rank, a proprietary stock picking system; 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.
Get the full Report on GIS - FREE
Get the full Report on K - FREE
Get the full Report on KRFT - FREE
Get the full Report on PEP - FREE
Get the full Report on DNKN - FREE
Follow us on Twitter: http://twitter.com/zacksresearch
Join us on Facebook: http://www.facebook.com/home.php#/pages/Zacks-Investment-Research/57553657748?ref=ts
Zacks Investment Research is under common control with affiliated entities (including a broker-dealer and an investment adviser), which may engage in transactions involving the foregoing securities for the clients of such affiliates.
Media Contact
Zacks Investment Research
800-767-3771 ext. 9339
Past performance is no guarantee of future results. Inherent in any investment is the potential for loss. This material is being provided for informational purposes only and nothing herein constitutes investment, legal, accounting or tax advice, or a recommendation to buy, sell or hold a security. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. It should not be assumed that any investments in securities, companies, sectors or markets identified and described were or will be profitable. All information is current as of the date of herein and is subject to change without notice. Any views or opinions expressed may not reflect those of the firm as a whole. Zacks Investment Research does not engage in investment banking, market making or asset management activities of any securities. These returns are from hypothetical portfolios consisting of stocks with Zacks Rank = 1 that were rebalanced monthly with zero transaction costs. These are not the returns of actual portfolios of stocks. The S&P 500 is an unmanaged index. Visit http://www.zacks.com/performance for information about the performance numbers displayed in this press release.
Logo - http://photos.prnewswire.com/prnh/20101027/ZIRLOGO
SOURCE Zacks Investment Research, Inc.
Share this article