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Kraft Stays Hungry for Growth


Food company reports tonight, hopes to meet growth forecasts.

One to watch: Kraft Foods (KFT) is out with second quarter results at the close. As a Dow component and America's biggest packaged food company its earnings always carry weight, as do purchasers of its products which encompass everything from Oreo to Oscar Mayer.

Most analysts rate the shares a hold, though they were upgraded by two bulge bracket brokerages in July. The company expects net organic (no, not that kind of organic) revenue growth of approximately 3% in '09. A decline in the dollar, which fell to fresh yearly lows yesterday, and moderating inflation cost pressures should bolster the bottom line going forward. The shares, though strong, have underperformed the broader averages of late as the market awaits evidence on the effectiveness of Kraft's three year turnaround aimed at emphasizing its most profitable product lines. In the interim the company's stable business mix and healthy dividend yield means investors are paid to wait. All in all a nice steady middle of the road stock - even if a few driving lessons might not go amiss.

What just happened: Stocks rose, sending the S&P 500 over 1,000, a remarkable rebound from its devilish March intra-day low of 666. Commodity prices hit yearly highs. Shares of Green Mountain Coffee (GMCR) fell off a cliff. And it was a mixed day for Sallies. Sallie Krawcheck will draw a big check after being tapped to head Bank of America's (BAC) worldwide wealth management unit. Her humble reaction to being picked for the post compared favorably to Sally Field's horror show at the '85 Oscars. But Sallie Mae (SLM) somehow managed to slip almost 3% in an otherwise strong market.

What's happening: Asia excluding Hong Kong ended higher, with Japan's Nikkei up for the 13th successive session. European markets are trading down on a round of profit taking after the recent strong rally. Here at home equities opened lower. Sterling is at a seven month high against the greenback and oil is off from its own five month peak.

What will happen: In economics, at 8:30 AM Eastern the Commerce Department announced June personal income tumbled 1.3%, its steepest decline in almost half a decade, while spending gained a slightly more than expected 0.4%. June pending home sales are out at 10:00AM. And we're learning about earnings from Archer Daniels Midland (ADM), BMC Software (BMC), CVS Caremark (CVS), D.R. Horton (DHI), Duke Energy (DUK), Electronic Arts (ERTS), Emerson Electric (EMR), GMAC, PPL Corp (PPL), Simon Property (SPG), Spectra Energy (SE), Tessera (TSRA), Toyota (TM), UBS (UBS) and Whole Foods Market (WFMI).

Happenstance: Discovery Communications (DISCA) reported second quarter results this morning, doubtless timed to coincide with Shark Week currently airing on its core cable unit. Tonight's offering is Sharkbite Summer, that much ballyhooed time in 2001 when our finned friends consumed more media attention than humans (statistics show it was actually a safer than average time to be in the water). Meanwhile real evil was lurking in the Middle East, undetected. A salutary reminder never to be distracted by trivialities.
No positions in stocks mentioned.
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