Kraft Foods, Inc. (KFT)

This is another stock one should buy and fall in love with and marry and never divorce...another longtime household brand name that will always have customers as long as people still eat. Once it has been spun-off from Altria I see it gaining momentum quickly.

Macaroni-and-Cheese! It's got more to do with this economy than you might think. In the immortal words of Sting: "When the world is running down, you make the best of what's still around." (Ok, so not some of his greatest lyrics, but The Police will always be a favorite band of mine.) Noted for its classic Mac-n-Cheese staple, Kraft Foods will provide a safe haven for your money over the next year or two as the US suffers its worse recession since the Great Depression. Personally, I think it's going to last longer than most people expect right now, and we'll have deep losses on a percentage basis from its Oct. 2007 high (at least 50%). In times like these, investors go with solid consumer staples like Kraft, Gillette, and Proctor & Gamble. A broad-based company, Kraft will weather this economic storm fairly well, and certainly won't lose to the S&P500. Its margins aren't as thin as I'd thought (8% on Profit margin and 13% on Operating margin). Its RoA (5.5%) and RoE (9.5%) are tepid in a soaring economy, but I'll certainly take these rates now. It's PEG ratio is a little high at 1.69, but not bad at all. Its book value is $18/share, 64% of its current share price (a good value, I think). Its Debt/Equity ratio (78%) and Assets/Liabilities ratio (1.1) don't excite me, but they don't frighten me either. And given that 18.9% of the shares are owned by insiders for this massive $42.5B company, that's a very good sign. For all of these reasons, I think this is a good defensive play considering the souring economy.

When the soup lines start forming in the spring and summer of 2009 and unemployment pushes past 10% by August/Sept. 2009, "Mac-n-Cheese" will be the order of the day, for investors and the unemployed alike.

Chosen to be a part of the High Yield Portfolio strategy. Originally created by Fool UK's Stephen Bland (TMFPyad) in November 2000, the High-Yield Portfolio (HYP) strategy invests in a diversified group of 15 blue chip dividend-paying stocks with strong dividend cover, relatively low debt, and a history of increasing dividend payouts. The holding period is theoretically forever -- unless a stock is bought out or cuts its dividend.

Sound crazy? Well, the point of the portfolio is not necessarily for capital gains (although that's certainly a bonus), but to produce increasing amounts of annual dividend income. Daily price fluctuations matter not -- it's the income that matters -- so it removes emotional trading from the picture entirely. Doubters should note that the original UK HYP from November 2000 returned 68% through December 2007 (while the FTSE 100 lost 8%). What's more, the portfolio income payout increased 29% over that seven year period, from 3,451 pounds to 4,462 pounds per year.

i EXPECT KFT TO UNDERFORM IN THE SHORT RUN. i

This company is a household name and who doesn't have Kraft something in their house. Now that they are free from Altria they can focus on food. They no longer are controled by a board that only knows tobacco. Their new management can focus on improving margins and their international sales. This company can target countries that are developing into world leaders. Just like US citizens, people in China and India are no longer going to have time to sit down for a home cooked meal. Bring out the Kraft mac and cheese.

Free at last. Now need to jump start its products. $5 billion dollar buy back means it sees itself as undervalued.

Historically Spin-Offs have beaten the market on their first 2 years.

Spiral mac and cheese boxes for a buck? People forget the true value of kraft after they graduate college. buy this company and hold it forever. last time i checked, college enrollment keeps going up.

Slow and steady (with nice dividends) wins the race. Nothing fancy about Kraft but it will continue to beat the market because it offers items that consumers will buy regardless of how the market is peforming.

Overvalued using valuation numbers. PE/LT G ratio of 2.5 shows the company will not perform well over the next few months. Earnings significantly declined last quarter, far more then revenue showing signs of potential trouble.Stock already trades near its price target, leaving little room for growth.

Sell off will take it down initially for 6 months then buying will rumble to pick up the bargin. This will bring it back to market like gains for the year then it's off to the races for the second year!

Commodity prices going down will result in unexpected increases in gross margins on KFT products.

My time frame is "forever" on this one. People gotta eat and this company gets it done. Reinvest the dividend for the long term and watch your money grow.

Will outperform as long as market is volatile. Safe haven.

Large cap multi-national company, should start seeing good numbers from overseas earmings...play on the dollar losing value, plus good dividend.

Defence play for a while longer.

Excellent brand recognition in a staple industry. Pundits are bad mouthing the stock which means it is a great time to buy. Once all the hype around the spin-off from MO dies down, this stock will be recognized for the value it brings to the table in its own right.

Cheap food --this is the new gold

Kraft has the fundamentals and management to make good returns in the long haul, not to mention the right industry for these markets.