I like Kraft mayonnaise

We are looking for nice buying opportunities in food related companies. So I decided to open my fridge and see what I had there. I found Kraft mayonnaise, and decided to see if it was a good idea to buy some Kraft shares.

Ratio test
Return On Equity (5 year average): 10. Industry: 23 (-)
Dividend yield: 3.4. Industry: 2.5 (+)
Quick Ratio: 0.4. Industry: 0.6 (-)
Total Debt to Equity: 0.8. Industry: 1.1 (+)
So we find a company that offers less for our money than the rest of the industry, but pays more dividend and is less indebted. If a company does not want to grow, ROE is not that important.

PER
PER (5 year average): 19

EPS
Its Earnings Per Share has been stable, but with no growth in general:

• EPS 2003: 1.9
• EPS 2007: 1.8

Some very well known investors such us Warren Buffett have bought a good portion of Kraft shares around today´s prices, however others (Soros, Icahn) have sold. It´s not a clear buying opportunity, so we have decided to stay away.

04/03/2008