Growing up, kids often wished they could be an Oscar Meyer Wiener because, as the classic slogan says, "If I were an Oscar Meyer Wiener, then everyone would be in love with me." To say that the investment community will not be in love with wiener-maker Kraft Foods
With many companies in the food business confronting rising commodity prices, it has become clear that preparation and planning were held at a premium at companies such as ConAgra
It seems that every time I go to the supermarket, the price of milk keeps rising. I've been drinking a glass of milk just about every day since I was a little dude (at 6'6", I owe a lot of my growth to milk and the medieval rack my parents stretched me on in our basement for years). Cheese prices have been rising, too, though I don't eat much of the delectable favorite of mice and men.
With the price of cheese rising in excess of 70% in the second quarter, Kraft apparently needs some time to adjust. Thus, it has lowered its earnings expectations for 2004 to a range of $1.55 to $1.62 per share from its previous forecast of $1.63 to $1.70 per share. This outlook puts a crimp in the company's sustainable growth plan and will also cause prices at the retail level to rise in the near term.
Major food producers such as ConAgra, Kraft, Sara Lee
While I would like to see Kraft Foods be a lot more responsive and forward-thinking toward commodity trends, it is clear that the company has an extremely strong brand name to go along with its well-known and liked branded products (Nabisco, Oscar Meyer, Philadelphia, Post, and Maxwell House). With the company's operating picture a bit out of focus, I would recommend the 2.38% dividend-yielding shares purely to income investors only.
Sara Lee is one of Mathew Emmert's recommendations for Motley Fool Income Investor . Want to learn more about the companies that will pay you to own them? Take a free trial today!
Fool contributor Phil Wohl spent more than 12 years on Wall Street and now concentrates his writing on more fictional characters. He has no stake in any firm mentioned above.