7 Reasons To Go Long Kraft Heinz Now We've been interested in The Kraft Heinz Company (NASDAQ: KHC) for several years now and it looks like another great time to buy some shares.

By Thomas Hughes

entrepreneur daily

This story originally appeared on MarketBeat

Depositphotos.com contributor/Depositphotos.com - MarketBeat

Kraft Heinz Is A Tasty Treat For Dividend Growth Investors

We've been interested in The Kraft Heinz Company (NASDAQ: KHC) for several years now and it looks like another great time to buy some shares. We've compiled a list of 7 factors that make this stock a highly attractive target now and for years into the future. If you're looking for a deep value, high-yield stock on the cusp of years of growth and dividend growth, Kraft Heinz is a great choice.

#1 & #2 Kraft Heinz Is A deep Value And High Yield

Marketbeat.com data reveals Kraft Heinz is trading at a deep value relative to its peers and the broad market. Shares of Kraft Heinz are trading at 14X this year's and next year's earnings consensus which compares to roughly 21x for the broad market S&P 500 and as much as 29x for the most highly valued Consumer Staples in the group. Hershey is trading at 25X its earnings as is Hormel while McCormick trades at 27X its earnings and Clorox at 29X.

In regards to the yield, Kraft Heinz is among the highest yielding stocks in the group as well as being among the best values. Shares of KHC yield about 4.35% compared to the 1.28% average for the S&P 500 and a range of 1.6% to 2.8% for most of its peers. General Mills is yielding about 3.4% but even it trades at a slightly higher valuation than Kraft Heinz.

#3 & #4 Kraft Heinz Is Emerging From Turn-Around And Ready To Grow

Kraft Heinz has been working hard for the past several years to streamline its portfolio, trim underperforming assets, improve the balance sheet, and position itself for growth. Those efforts have been paying off and have the company poised for core growth in its continuing operations and new acquisitions. Evidence of this work lies in the recent acquisition of Brazilian company Hemmer. Hemmer is a sauce and condiments company that will help Kraft Heinz not only expand into a very large market but gain a strong foothold in Latin America. The balance sheet it's still carrying quite a bit of debt but the financial trend is positive, cash levels remain high, and coverage is positive. The debt levels may not come down much over the next few quarters due to acquisitions but ultimately, this will lead to enhanced revenue and earnings growth down the road.

#5 Kraft Heinz Clears A Legal Hurdle

The SEC came to a settlement with Kraft Heinz over alleged wrongdoings by two of its former executives. The executives were charged with a long-running scheme that eventually led to a restatement of earnings. That restatement of earnings sparked a massive decline in share prices that helped to set up the opportunity facing us today. Without admitting any wrongdoing, Kraft Heinz settled the case with a $62 million civil penalty that we view as a pittance. A lawsuit related to the stock drop brought on by shareholders was dismissed as well.

#6 Kraft Heinz Has Dividend Growth In Its Outlook

The outlook is still a little hazy but we believe Kraft Heinz has dividend growth in its outlook. It may take several quarters to a few years before we see one, but the company is on track for improved profitability that supports the idea of both balance sheet improvement and dividend increases. Although it has been a few years since the last increase, and Kraft Heinz made a cut since then, the company is ultimately a dividend grower like most of its peers. We fully expect that when the board feels the time is right this company will hike its payout.

#7 The Technical Outlook: Kraft Heinz Is In A Major Reversal

The Kraft Heinz story is all the sweeter because the technical outlook matches the fundamental outlook. The company is emerging from a dark time stronger than before and ready to grow again and that can be seen in the charts. The market capitulated in 2019 when financials were restated, price action has since formed a bottom and reversed and is now retesting support near the $35 to $36 level. Based on the outlook, we see the stock trading sideways at a minimum but ultimately moving higher. The company is scheduled to report earnings on October 29th and that could be the catalyst to really get it moving higher. Either way, in our view, based on the value, the dividend, the turnaround, and the outlook for growth we see this stock moving up by triple digits and possibly cross the 200% market over the next one to two years.

Seven (7) Reasons To Go Long Kraft Heinz Now

Want to be an Entrepreneur Leadership Network contributor? Apply now to join.

Editor's Pick

Related Topics

Science & Technology

These Are the Top 6 AI Threats to Your Business Right Now

The modern workforce is forever changed by artificial intelligence. If you fail to understand that we will all need to learn AI to some degree, you haven't been paying attention.

Business Ideas

55 Small Business Ideas to Start in 2024

We put together a list of the best, most profitable small business ideas for entrepreneurs to pursue in 2024.

Business News

Here Are 3 Strategies Startup Founders Can Use to Approach High-Impact Disputes

The $7 billion "buy now, pay later" startup Klarna recently faced a public board spat. Here are three strategies to approach conflict within a business.

Business News

'This Can't Be True': Google Responds to Viral Hoax Claiming the Company Is Shutting Down Gmail

The fake news release started making its way around X on Thursday.

Business News

Vice Will No Longer Publish Content on Its Website, Lays Off Hundreds of Staffers

Vice Media CEO Bruce Dixon announced the news in an internal memo to employees on Thursday.

Business News

I Tested the 'Invest As You Shop' App to See If It Really Makes Investing Less Intimidating

Grifin is an app that tailors a user's investments to their spending habits. Now, the app is getting even more personal.