Warren Buffett has long been known for his masterful stock picks, and Kraft Heinz Co (KHC) has been a favorite of his for years. As the seventh largest holding in his Berkshire Hathaway portfolio, commanding 3.45% of it, Kraft Heinz is a stock that Buffett has consistently stood behind. Despite underperformance on the charts in recent years, Buffett has never wavered, even expressing his willingness to hold onto the stock for a decade.
Kraft Heinz Makes A Golden Cross
Recently, the stock made a Golden Cross, a significant chart pattern that signals a shift in momentum and investor sentiment. The 50-day Simple Moving Average (SMA) has crossed above the 200-day SMA, indicating a strong uptrend and a reversal of the bearish sentiment that has weighed the stock down. Notably, Kraft Heinz has shown a remarkable 16.5% total return since October, outpacing the S&P 500.
Fundamentals Point to a Turnaround
On a fundamental level, Kraft Heinz is showing promising signs of a potential turnaround. As a major player in the global consumer staples sector with 200 trusted brands, the company’s recent reinvestment efforts are bearing fruit. A strategic shift towards marketing and product innovation is driving bottom-line growth, particularly in segments such as Emerging Markets, cold cuts, and food service. Additionally, the company’s prudent approach to deleveraging, well-covered dividends, and a $3 billion share repurchase program are indicative of its sound financial position.
Value Stock With Long-Term Potential
Despite the challenges posed by the retail environment and slightly elevated leverage, Kraft Heinz remains an attractive investment opportunity. With a forward price-to-earnings ratio of 12.75, well below the sector median of 17.96, and a forward dividend yield of 4.23%, the stock offers significant value investment potential. Furthermore, international sales growth, strong cash flow generation, and improving profitability indicators position Kraft Heinz for optimistic long-term returns.
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