As a trader and investor it’s important that we look around us at changing social and demographic trends which can affect companies. One sector I highlighted at my recent seminar is “snaking” and it’s a trend which will continue globally. Being a trend follower is not all about looking at charts, in fact a visit to your local supermarket can also reveal a lot of what’s going on.
Like it or not people just don’t sit at the table and eat 3 meals a day anymore at set times. The trend is eating on the go, eating whilst using the internet or watching TV (I am sure many are reading this with a snack or drink not too far away) and generally more pre prepared small packet foods which are higher margin.
One company which stands to do well from this trend is Kraft Foods (NYSE:KFT). Kraft will be splitting in to two companies on the 1st October 2012, so if you own shares now you will end up with one share in Kraft Foods which will be the grocery brands business and one share in the new snack business Mondelez which will trade on the NASDAQ under MDLZ. If you have a financial spread bet then the bookmakers will adjust your bet accordingly.
Kraft own household brands Including Cadbury, Oreo, Kenco coffee, Lu, Ritz to name a few and have a strong presence in emerging markets and the Oreo cookie is a best seller in China. Kraft has cashed in from taking taking the Oreo and adding changing flavours to suit Local tastes such as Green Tea and Mandarin Orange.
Kraft are also moving more into the “healthier” snack markets with product such as Belvita breakfast biscuits which are made with wholegrain cereals, little sugar and some have live yogurt fillings.
Market researcher The NPD Group estimates that the number of times people snack in the mornings will jump 23 percent between 2008 and 2018. That’s compared with a 20 and 15 percent increase in afternoon and evening snacking, respectively so this offers great growth potential.
Of course Europe is a weaker spot with cash strapped consumers trading down to cheaper home brands and higher commodities prices also eroding margins but overall Kraft is in a good position to deal with this and slower European markets are being compensated by faster emerging markets.
Kraft shares have really done nothing the last 10 years, however I think the next 5 years are going to be much better for shareholders and we are going to start seeing results from restructuring that has been going on in the background.
So far this year Kraft is up around 8% and shares are trading at around $40. Looking forward I can see the two parts trading at over $50 in the next 12 months. Kraft also pay a dividend currently yielding around 3%. The business remains fairly defensive yet also has growth in emerging markets and new products.
Before you try financial spread betting it is well worth getting some good advice and training. Spread betting veteran Vince Stanzione knows how to make a living from spread betting, having been trading for over 25 years. He has produced a course, ‘Making Money From Financial Spread Trading’, which is a 160-page workbook, two and a half hours of DVDs and a members-only website. To find out more go to www.winonmarkets.net