You Can’t Invest In Kraft Heinz Like Buffett (Video & Podcast)

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Summary

KHC is down more than 40% over the last 12 months.

Stable fundamentals with a price to book below 1 and a forward PE ratio of 13 make it look like a great value investment. Plus, Buffett owns it.

The best way to understand such businesses is to go to the store, so we do that.

Kraft Heinz (KHC) is a company that will, to quote Buffett:

be prospering a century from now.

The above, in addition to the decline in the stock price makes many people attracted to the stock. The 5% dividend certainly increases the attractiveness.

However, one must look at the stock from Buffett’s perspective before investing. Buffett got to KHC by owning Heinz, which he bought back in 2013 at terms we could only dream of. He bought $8 billion preferred shares yielding 9% and only $4.25 billion of normal shares. Therefore, one must see at what price the current business could be compared to Buffett’s entry point and terms back in 2013.

What is also very important to understand about this investment is to actually go to the store and see how are KHC’s products are positioned, what the competition is like and whether there are any growth opportunities. I have done that, and pictures from the store will show you in what kind of competitive environment KHC has to compete.

0:00 April 2018 stock analysis overview

1:49 Fundamentals, goodwill, debt

3:33 Business strategy

5:00 Going to the store

8:15 Buffett’s investment and strategy

11:26 Conclusion

Podcast:

Video:

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Disclosure: I/we have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it. I have no business relationship with any company whose stock is mentioned in this article.

 

 

 

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