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Kraft Foods and Whole Foods Open Near 52-Week Highs


Here's a closer look at these two market leaders.


The Dow closed up less than 1%, NASDAQ and S&P 500 up more than 1% yesterday, and plenty of stocks rose to new 52-week highs in the trading session. Among them were Kraft Foods (KFT) and Whole Foods Market (WFM), which reached multiyear highs of $38.82 and $78.29 per share, respectively.

Kraft Foods said this week that its announced split into two companies would result in about 1,600 job cuts. The company also raised its earnings and revenue guidance for 2011, which pushed shares higher. The brand portfolio of this global packaged-food giant includes Oreo, Nabisco, Cadbury, Maxwell House, and Oscar Mayer. The Northfield, Ill.-based company has a market cap of $68.4 billion.

Its price-earnings and price earnings-to-growth ratios are above the industry average, but so is the operating margin. The long-term earnings per share growth forecast is 9.6%, and the dividend yield is 3.1%. Short interest is less than 1% of the float. Fourteen of 19 analysts surveyed rate the stock at Buy or Strong Buy. The share price is up about 7% in the past month, as well as about 29% higher than a year ago. The stock has outperformed competitors HJ Heinz (HNZ) and Unilever (UL) over the past six months.

Whole Foods CEOs John Mackey and Walter Robb recently were recognized by MarketWatch as two of the top CEOs in 2011. The company is expected to post double-digit EPS and revenue growth on February 8. The natural and organic food supermarket chain operator has more than 300 stores in the United States, Canada, and the United Kingdom. It is headquartered in Austin and has a market cap of $13.9 billion.

Its earnings per share are anticipated to grow 16.6% over the next five years. The P/E and PEG ratios are higher than the industry average, but so is its operating margin. The dividend yield is 0.8%, and short interest is 4.4% of the float. The analysts' consensus recommendation is to buy the stock. The share price is more than 17% higher than a month ago, as well as up more than 47% from a year ago. Over the past six months, the stock has outperformed competitors such as Kroger (KR) and Safeway (SWY).


Bullish: Investors interested in exchange-traded funds invested in Kraft Foods and/or Whole Foods might want to consider the following trades:

  • PowerShares Dynamic Retail (PMR) is more than 30% higher than the 52-week low.
  • Consumer Staples Select Sector SPDR (XLP) is about 17% higher than the 52-week low.
  • Vanguard Consumer Staples ETF (VDC) is almost 16% higher than the 52-week low.
  • PowerShares Dynamic Food & Beverage (PBJ) is about 14% higher than the 52-week low.
Bearish: Traders may prefer to consider these alternative positions:
  • Casey's General Stores (CASY) is up more than 54% from the 52-week low.
  • Cal-Maine Foods (CALM) is up more than 38% from the 52-week low.
  • Lancaster Colony (LANC) is up almost 35% from the 52-week low.
  • Weis Markets (WMK) is up almost 20% from the 52-week low.

Editor's Note: This content was originally published on by Nelson Hem.

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No positions in stocks mentioned.

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