I can’t take it anymore. I’ve been watching this stock get cheaper and cheaper, and with this recent sell of it’s time to make the move. This company is not growing, but it’s also not going anywhere. How do I know? Well, are you planning or know anyone that is planning to stop using Heinz ketchup? I didn’t think so.
Imagine collecting 5.88% dividend yield on Kraft Heinz with a payout ratio of only 29%. Not only that, but the price to book ratio is only .79 with a forward PE ratio of 11.40. Wow. This company is cheap.
Back in early 2018 the stock was almost $100 a share, today it closed at $43.29. The stock has been cut in half in a short a mount of time.
I’d like to say I’m calling the bottom here on $KHC, but I don’t know. We do have a weekly hammer forming on the candle stick charts which is encouraging, but we could still see this stock to continue to sell off.
I do think we have reached a point where we have little risk compared to our potential reward.
Yes, the company has gathered up a lot of debt on it’s balance sheet since 2014. It has a interest coverage of 4.75, which I’d much rather prefer something higher. The company has been taking on debt to try and fuel growth. Recently it just bought out ‘Primal Kitchen’ as trends continue for organic and higher quality food items.
So, are these the right moves? The stock market doesn’t really think so, but it’s hard to say. Campbell’s soups have also been trying to make similar plays adding debt to their balance sheet as well.
Right now, it doesn’t seem to be working, but these types of moves will take time. We likely won’t know for a couple of years if these types of accusations work out.
I do believe the sell off is getting exhausted. I also believe Kraft Heinz will be around for generations to come. So with that, lets buy now.
I will be along for the ride and will buy this stock myself. Entering in 12/27/2018 in the Tao Tracker as the purchase date.
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