PLAYING THE BRICS

Looking for a safer way to play the BRIC world?

You might want to look at last year's Kraft spin off, Mendelez, MDLZ. 

As a recent Barron's article notes the stock, trading at $28 and change, is essentially a snack food company. Just a few of its products include Cadbury, Ritz Crackers, Dentyne, Oreo Cookies and Wheat Thins. It has many others like Philadelphia cream cheese and Dentyne.

Buffett can have his cherry coke. Offhand we don't know of a single, solitary interplanetary soul who doesn't enjoy an Oreo and a cold glass of milk?

Right off the bat you need to know we own the stock and have been slowly adding to it since acquiring shares in the spin off last year. 

Understand in our view this is not a trader but one of those God-awful, Warren Buffett-like buy and holders with a small dividend and a lot of growth potential. The current p/e, around 18, is a little high, but isn't that what expected growth is all about?

Take a look at some of its competitors, all growing slower at much higher P/E ratios. And could this be a decent currency play if the dollar tanks?

According to Barron's, with revenue in 2012 of $35 billion, 75% of its sales last year came from three rapid growing snack food categories, chocolate, candy, cookies and crackers.

 As one analyst puts it, snack foods are lucrative with good profit margins and little competition from the ever-worrisome private-label firms that continue to chew away at the margins in the grocery business.

In case you're not aware Pepsi's another snack food business, more so than many realize. Here's a little snack to consider with your Oreos and milk. Of MDLZ's 29 well-known brands, nine generate more than $1 billion in annual sales. And, yes, Oreos is one of them.

Now about those BRIC countries, Brazil, Russia, India and China. MDLZ gets about 30% of its annual sale there. When you consider the prospects for annual growth in developing versus developed countries, it's a no-contester.  And remember at least for the nonce snack foods are cheaper and have better profit margins than cars.

A possible unforeseen risk is the food police. We just toss that in so you can't say no one did.

One other quick point. Though we have not heard anything, this is just one of those wild, silly thoughts we get every once in a two-thirds moon while walking the dog, Taylor. 

You want to remember the MAINE. But recall too the HEINZ.