How to Play This Huge Spinoff

In today's edition, analyst Austin Smith explains the best way to play Kraft's spinoff. Investors will have their pick between a high-growth international snacks division and a more stable domestic grocery segment. While the latter is expected to be less volatile and provide a hearty dividend, Austin likes the intentional snack division better. He believes Kraft's brands will have more upside in emerging markets, he likes the fact that Irene Rosenfeld will be hanging her hat with international snacks, and he believes Oreo is one of the best assets in Kraft's quiver of brands. If you look at the 2008 spinoff of Philip Morris from Altria, which closely resembles this Kraft split, you'd see strong growth from both segments, but more outperformance from the internationally focused Philip Morris division.

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Austin Smith owns shares of PepsiCo and Philip Morris International. The Motley Fool owns shares of PepsiCo. Motley Fool newsletter services recommend PepsiCo and Philip Morris International. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.


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