Is Kraft Heinz a Good Investment?

PHOTO CREDIT: Kraft Heinz

OVERVIEW

The Kraft Heinz Company is a company based in the United States. The company develops, manufactures, and distributes food products around the world. The company makes condiment sauces, cheese, dairy, fresh and frozen food, and many others. It operates under the Kraft, Heinz, Oscar Meyer, and other brands as well. The company was founded in 1869.

Why You Should?

  1. Kraft Heinz is a great reopening play in an investor’s portfolio. The company saw a drop in demand for their products as large customers like restaurants and sporting venues shut down due to the pandemic. However, once this pandemic is over, the company will return to a strong growth environment as these venues will reopen.
  2. Kraft Heinz has an extremely strong brand recognition across the markets that it operates in. For example, the company operates popular brands like Kraft, Heinz, Lunchables, and many others (all of which are popular amongst consumers). This will benefit the company gain new customers and retain others for a long period of time. This will benefit investors.
  3. The COVID-19 pandemic has also benefited some aspects of the company’s business. Early on in 2020 (as the pandemic was starting to take hold across communities), people stocked up on comfort food products like Mac and Cheese, condiment sauces, cheese, and many other pantry goods. This helped the company see a rise in demand for their products.
  4. The company is an extremely safe investment option due to the essential nature of the products that it sells to consumers around the world. Regardless of the economic times, people will still purchase food (especially cheaper food options like the ones that Kraft Heinz offers). This will benefit the company as it will help it stay stable during rough economic times.

Why You Should Not?

  1. The company faces tough competition from other companies in the food and beverage industry. Companies like Coca-Cola, PepsiCo, General Mills, Mondelez, and other independent brands like Kirkland Signature (Costco). This might hurt the company and its investors in the future.
  2. The COVID-19 pandemic hurt many aspects of the companies business. From lower commercial sales (sales to restaurants, schools, and sporting venues) to volatile prices in the commodities market, the company has had its operating results negatively impacted by the pandemic as well. This will continue to hurt the company. in the short to mid-term.
  3. The company has had a lagging stock price over the past couple of financial years as investors like Warren Buffet sold shares due to dismal operating results and other factors. This hurt investors in the company over the past couple of financial years and also hurt the company.

MY OPINION

I think that Kraft Heinz is a decent long-term investment due to its position as a good reopening play, its position as a safe investment option, strong brand recognition, as well as the positive impacts from the COVID-19 pandemic. However, tough competition, negative impacts from the pandemic, as well as a lagging stock performance might hurt the company and its investors in the future.

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Aaditya Patel is a writer who publishes analysis on companies publicly traded on the NYSE. Follow him @the_investing787 on Instagram for summary posts.

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Aaditya Patel

Aaditya Patel

Aaditya Patel is a writer who publishes analysis on companies publicly traded on the NYSE. Follow him @the_investing787 on Instagram for summary posts.

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