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Seven Reasons Kraft's Stock Looks Appetizing

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Company's beating estimates and branching out.

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Ever walk in the city and get hit in the face by some mysterious drop of liquid from the heavens, despite the fact that it's not raining? I've been getting hit for the last 10 years and still haven't figured it out.

A full domestic economic recovery could take a little while. At least, that seems to be one sentiment that's out there. And as a result, there's a camp that says investing in food stocks makes a good deal of sense. You know -- the defensive play; the "we all gotta eat" theory.

I don't disagree with that pattern of thought (especially considering it's almost lunchtime). However, in and of itself, that's not the reason I think Illinois-based Kraft (KFT) -- the company that sells my kryptonite, Oreos -- is a good long-term play.
I've got my eyes on a few other things, too. Here are some thoughts (in no particular order):

1. The estimate for this year has gone from $1.88 to $1.91 over the last 60 days, and the estimate for 2010 has gone from $2.02 to $2.06 during that same time. That's not huge, per se, but it's in the right direction.

2. There was a smidge of insider activity in May in the mid $20s -- not too far from where the stock is trading. I'm not one to pony up on insider activity alone. But it's encouraging to see that he -- in this case, a director -- sees this as a decent entry point. By the way, Frank Zarb is no dummy: He served at the helm of the NASDAQ stock exchange.

3. Look at their brands, people. Unless we're sitting on the edge of a smoking crater, kids and adults with the munchies are going to be gobbling up its goodies for some time to come.

4. Data indicates it's met or beaten earnings estimates in 3 of the last 4 quarters. Not the best record out there, but nothing to sneeze at either.

5. As populations increase, segments like its Kraft Foods Developing Markets will likely do even better.

6. It trades at an appetizing 12.2 times or so the current 2010 estimate. True, that's not super cheap. But it's good eats to me, nonetheless.

7. I don't wanna forget that dividend. I see it as a double-stuffed Oreo. The forward yield on this cookie is almost 4.6% -- not bad, right?

Overall, I'm keen on Kraft in the mid $20s. The stock could trade to the low to mid $30s within a year's time.

Have a great one!

No positions in stocks mentioned.

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