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Jim Cramer: Missed Heinz-Kraft? Buy Organic Stocks
Aspire, Thought Leaders | 02 April 2015
By: Raymond Leung
Articles (142) Profile

Heinz announced its merger deal with Kraft just last week, backed by both Berkshire and 3G Capital. Following the merger announcement, Kraft’s share prices soared. With the merger, the new food giant Heinz-Kraft will be the third largest food and beverage company based on revenue ranking, trailing behind PepsiCo and Nestle.

Although Heinz has the bigger piece of the pie, Kraft will still benefit extensively from Heinz’s pervasive international presence. The food giant would sport a 3.5 percent yield and a $16 special dividend from Buffett to Kraft’s shareholders. Furthermore, costs will be trimmed by $1.5 billion by end 2017 due to operations consolidation.

Organic Stocks Attractive Too

While there are some upset investors because they missed this, Cramer thinks otherwise. He believes that Kraft products such as Oscar Mayer hot dogs, salad dressing and macaroni and cheese are diminishing in demand because of the natural and organic food trend.

The millennial generation is currently occupied with food that is natural, organic and healthy, thus Cramer’s distance from Kraft. Wall street has also figured this out and is slowly migrating to natural and organic stocks. Below are some of Cramer’s recommendations for such stocks.

WhiteWave Foods

Source: Analysts Calls on WhiteWave Foods, FactSet Research Systems

WhiteWave Food are known for its natural food produce such as plant-based food and beverages (e.g. soy milk and almond milk), coffee creamers, dairy products and organic green and produce. The company also sells products under Earthbound Farm which are popular with consumers.

Analysts have been very bullish with 79 percent of them calling “Buy” while the remaining were “Hold” calls with no sell calls. According to Nasdaq, there is a total of 11 “Strong Buy” calls from different research houses. Based on 19 ratings, the average target price for WhiteWave Foods is $44.18.

Hain Celestial Group

Source: Analysts Calls on Hain Celestial, FactSet Research Systems

Hain Celestial is a company selling natural and organic grocery, beverage, snack and personal care products. It has a huge product range of organic cookies to frozen food and even organic skin products. Their products are mainly sold in North America and Europe.

The street has rather positive sentiments towards Hain Celestial; 71 percent “Buy” and 29 percent “Hold” with no calls to sell. The average target price based on 21 analyst ratings is $65.22.

Freshpet

Source: Analysts Calls on Freshpet, FactSet Research Systems

Another company known for its natural and organic food products, but for pets. Freshpet is the counter with the strongest bull sentiments among the three recommended companies by Cramer. It has a 100 percent “Buy” calls based on analysts’ reports from four research houses. The average target price given by the four research houses to Freshpet is $21.

Go Organic

Undoubtedly, the Heinz-Kraft merger was a reasonably good deal that many investors have missed. However, as Cramer mentioned and recommended, organic companies are also looking rather attractive right now, be it food for us or pets.

Trained in fund management, Raymond is familiar with shares and various investment vehicles.

Please click here for more information about this author.


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