First Kraft, Now Hershey Sweet on Cadbury
But does all the chatter really make any difference to the food giant?
Asian stocks were a bit of a mixed bag. The Hang Seng was off 0.15% but the Nikkei ended 1.61% higher. However, European stocks were in positive territory early this morning. And here in the US, we're currently trading higher.
Here's what I'm focused on today:
Kraft (KFT)/Hershey (HSY):
Kraft upped its 2009 outlook.
Within the release, the following snippet caught my eye:
" 'As we complete our turnaround, we're delivering high-quality earnings growth, despite the difficult economic environment,' said Kraft Foods' Chairman and CEO Irene Rosenfeld. 'And we're doing this while continuing to invest in our brands and businesses. As a result, we're well positioned to deliver sustainable top-tier performance, with or without Cadbury (CBY).' "
Rosenfeld's comments echo my sentiment exactly. I'm hip on this company, as I've mentioned before (see Why Kraft Should Stop Chasing Cadbury Bunny) for a bevy of other reasons besides what could happen if it consumed Cadbury.
Some other thoughts:
1. Will Hershey hop in the batter's box and take some cuts as people are speculating? I'm not sure. I think it would be a terrific thing for Hershey to link up. But all the hubbub seems like more of a distraction at this time than perhaps it's worth for Kraft. Kraft is a legend and a force to be reckoned with -- with or without Cadbury.
2. The shares dipped a smidge in yesterday's session and I see it as an opportunity.
Does Google heart China or what? Baidu (BIDU) shareholders have got to be jumping up and down. (See What China Means to Google.)
Some quick thoughts:
1. As I've said before, I'm much hipper on Yahoo (YHOO) and its prospects, so I'd put my chips there.
2. At the same time, I don't think a battle with the Chinese is going to be Google's death knell, or that it's going to lose its cult-like following just because of this chatter. It's expected to turn out some pretty good earnings and grow. Also, despite concerns, the stock really hasn't taken that much of a hit -- a good sign.
Chipotle Mexican Grill (CMG):
Justin Sharon points out in his article this morning that Wells Fargo bumped up its rating to Market Perform.
Although I like the food, I'm not quite as sweet on the stock. At $95 and change, I think its a tad overextended, given the 2010 estimate of $4.11 (even though there could be some upside to that number). I'd much prefer to munch on McDonald's (MCD), or even sip on Starbucks (SBUX), for that matter.
Toll Brothers (TOL):
Barclays lopped its rating to Equal-weight.
My two cents:
1. I've been nothing but complimentary in the past about the products this high-end homebuilder puts out. Nothing has changed on that front.
2. However, I also haven't been excited about the stock for quite a while, and nothing's changed on that front, either. Many of the folks that have the wherewithal to drop half a million or more on a home are still worried about their jobs, and savings are still in hunker-down mode. The prospect of rising interest rates is another variable that could throw a fly in the ointment for the upper-end homebuilders.
Bottom line, I agree with the downgrade.
Have a great day!
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