Many investors argue over whether or not Kraft Foods (NASDAQ:KRFT) offers a better investment opportunity than Mondelez International (NASDAQ:MDLZ) after the spinoff. The answer to that question might not be what you expect.

Company strategy
Prior to determining whether or not Kraft is likely to offer a better investment opportunity than Mondelez International, let's first take a look at Kraft specifically.

Kraft's strategy is based on long-term brand building. In order to have the ability to further build current brands, Kraft aims to cut costs, increase cash flow, and steal market share. At the present time, Kraft is taking a conservative approach to marketing, promotions, and innovation. This type of discipline, combined with supply chain simplification, should improve margins and aid the bottom line. 

As you might already know, net revenue declined 1.1% to $4.7 billion in the second quarter year over year. But this shouldn't frighten long-term investors. Kraft expects stronger revenue and profit growth moving forward. And it should be noted that in addition to free cash flow of $399 million year to date, Kraft raised its cash flow target to $1.2 billion from $1.0 billion for the fiscal year. 

Notice that everything about Kraft is focused on the long term. It's a highly strategic and disciplined company, which Foolish investors like to see.

Brand performance and balance
Kraft's brands delivered very mixed performances in the second quarter, but this is exactly what makes the company's diversification and balance so valuable.

Kraft's brand portfolio consists of beverages (15%), groceries (25%), refrigerated meals (18%), cheese (21%), and international and food service (21%). Regardless of what industry you investigate, finding this type of balance would be extremely challenging.

Perhaps an even bigger selling point is Kraft's market penetration in the United States (98%) and Canada (99%). In other words, you're going to find a Kraft product in almost every household. Kraft owns 27 brands with annual sales of more than $100 million, and 10 brands with annual sales of more than $500 million.

And perhaps the biggest selling point here is that thanks to the popularity of Kraft's brands, retailers remain highly interested in carrying its products on their shelves.

Snacks and more
Mondelez International is more of an investment in snacks. But this isn't a bad thing. Mondelez International delivered $35 billion in revenue in 2012, and it's the market share leader in biscuits, candy, chocolate, and powdered beverages.

Its brands are marketed in 165 countries, and in addition to top-line growth potential via geographic expansion, it plans on driving margin expansion through a supply chain redesign. Over the next three years, this is expected to:

  • Save $3.0 billion in gross productivity
  • Deliver $1.5 billion in net productivity
  • Deliver $1.0 billion in incremental cash

As you might have guessed, the answer to the question of whether or not Kraft is a better investment than Mondelez International is that they're both likely to be quality long-term investments. Prior to looking at how these two companies compare on a fundamental basis, let's also throw ConAgra Foods (NYSE:CAG) into the mix.

ConAgra recently lowered its FY 2013 earnings-per-share guidance to $2.34-$2.38, citing category and consumer challenges. But like Kraft and Mondelez International, it's important not to get nervous due to short-term events. If you're looking to invest in a quality company, then you actually have a trio of companies mentioned in this article.

ConAgra might not be popular at this very moment, but it plans on revising its merchandising and promotional plans, and improving its SG&A costs, which should lead to bottom-line improvements. It's going to take time for the synergies from the Ralcorp acquisition to be realized. Furthermore, ConAgra is highly diversified, offering entrees, snacks, condiments, desserts, and more.

For a fundamental comparison:

 

Forward P/E

Net Margin

ROE

Dividend Yield

Debt-to-Equity Ratio

Kraft

17

10.02%

24.13%

3.70%

2.32

Mondelez International

19

6.74%

5.69%

1.80%

0.57

ConAgra

12

5.00%

15.88%

3.10%

1.81

Kraft is impressive on a fundamental basis. That 3.7% yield is especially enticing. The debt-to-equity ratio is high, but Kraft is a financially disciplined company, and considering the company's strategic goals, this number should improve. As far as Mondelez International and ConAgra are concerned, they're also fundamentally sound.

The bottom line
Kraft likes to think of itself as having the spirit of a start-up, and the soul of a powerhouse. Based on the company's highly strategic long-term growth initiatives and brand building combined with its fiscal discipline, this would be an accurate description. If you're looking for a quality long-term investment in food, then Kraft should be considered.

Dan Moskowitz has no position in any stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. 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.