Forget the salmonella outbreak that had tomato growers seeing red when their fruit was thought to be the culprit. The jalapeno is now the prime suspect, of course, and perhaps appropriately, ketchup maker H.J. Heinz
International markets helped ripen the results. Russians apparently want to mix ketchup with their vodka, since Russia is reportedly the second-largest market now for the red sauce. Packaging innovations have also helped the Motley Fool Income Investor recommendation achieve a record 84% share in Canada for ketchup.
Yet these results shouldn't surprise investors, who realized last quarter how important the international market was for Heinz. Foreign markets, which grew sales at least 20% in every region, make up more than half of its revenue and helped drive Heinz's consolidated sales up 14.9%.
Domestically, it was a bit of a mixed bag, particularly as food-service revenue dipped 2.8% on a greater than 4% volume decline. Although some investors are getting an appetite for restaurant stocks again, the declines in comps we've been seeing recently underscore the weakness Heinz reported. Moreover, Hormel Foods
Heinz could soup things up quickly if the nice fit it sees in Campbell Soup
The ketchup king has made a couple of acquisitions lately, though, and new product introductions have been fueling its growth. The products in the Weight Watchers line, for example, are among its top-selling products and represent $1 billion in revenue.
Heinz's top 15 brands account for 70% of sales and have enjoyed 12% compounded growth over the past two years. I find that the opportunities for growth both here and abroad -- along with the potential for an acquisition of Campbell's -- make the ketchup maker a still-tangy choice.
Last time around, I thought Heinz was attractive at $50, and although it's increased only slightly since then, my opinion hasn't changed.
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