Investors: Consider Bubbles Certain to Burst – Mondelez International Inc (MDLZ)

Page 1 of 2

The housing bubble has caused economic pain in the U.S. and elsewhere since 2008. Some investors are avoiding real estate investing all together. They should consider other bubbles certain to burst, which can provide a good ROI. This means chewing gum, bubbles for bathing, and champagne. Investors can enjoy these – literally and equity-wise – and invest in companies with bubbles that consumers enjoy.

Mondelez International Inc (NASDAQ:MDLZ) knows a thing or two about bubbles. Their brands include Trident Gum. Trident is the number one chewing gum brand globally. A core brand can prop up a company if less successful new product offerings hinder planned growth. Products with a rich history generally produce good cash flow while an enterprise reconfigures product offerings and marketing strategies.

Mondelez International Inc (NASDAQ:MDLZ)This past November, Mondelez reported Q3 2012 results. Results on an Adjusted Pro Forma Continuing Operations Basis included Net Revenues declining 5.1 percent to $8.3 billion; Organic Net Revenues increased 1.5 percent. Operating Income increased 2.2 percent, up 7.5 percent on a constant currency basis.

Diluted EPS declined 2.6 percent to $0.37, up 2.6 percent on a constant currency basis. Mondelez reaffirmed 2013 guidance of Organic Net Revenue growth at the low end of the 5-7 percent range, and Operating EPS of $1.50 to $1.55 based on average August 2012 foreign currency rates.

Irene Rosenfeld, Chairman and CEO, made an interesting comment, (November 7, 2012 financial news release), “This reflected the lapping of our exceptional performance in the third quarter last year and a lower contribution from pricing.  We also had some short-term executional missteps in a few key countries, but these issues should be largely resolved by the end of the year.  Growth in our core categories continues to be robust.  And we remain confident in our ability to deliver our 2013 and long-term targets.”

Investors must always research management and their business strategies. ‘Executional missteps’ should be rare, and must be resolved quickly. Encouraging in her words is the growth in the Company’s core categories. Be comfortable, before you invest, that management teams will resolve missteps for shareholders’ benefit.

Beiersdorf AG (NASDAQOTH:BRDFF) has the world’s largest skin care brand, NIVEA (NIVEA Bath Lotions, creams, and such). Beiersdorf’s a significant purveyor of cleansing bubbles. Their three core brands are NIVEA, Eucerin, and La Prairie.

The Company’s sales grew by 4.7 percent organically in the past fiscal year (preliminary figures). In nominal terms, sales increased by 7.2 percent to €6,040 million from €5,633 million. Organic Sales in the Consumer Business Segment increased by 4.9 percent. Their tesa subsidiary produced an Organic Sales increase of 3.6 percent.

Stefan F. Heidenreich, CEO, said, “We have strengthened our NIVEA core brand and gained market share in many countries. Both the Consumer and tesa business performed well, in particular in the emerging markets. In addition, we significantly improved our innovative capabilities.”

I typically gravitate to enterprises with strong core brands. They’re often a security blanket when a company embarks on more daring initiatives. Think of their NIVEA brand as a veteran All-Star shortstop on a ball team that’s gradually breaking in a new first baseman; say a new body care line. You want a strong anchor in place for the resultant business plays that will take place.

Improvement in innovative capabilities is something for investors to consider. Innovation can result in shorter product development lifecycles, and more efficient product production runs, which keep expenses in line. This all contributes to better profit.

New product development is a component of improving innovative capabilities. In July 2012, the Company expanded their research horizon for Eucerin and developed the new Eucerin DermoCapillaire scalp & hair care range. Eucerin research teams conducted rigorous research to discover an active ingredient that interrupts the inflammatory cycle.

Page 1 of 2
blog comments powered by Disqus
Insider Monkey Headlines
Insider Monkey Small Cap Strategy
Insider Monkey Small Cap Strategy

Insider Monkey beat the market by 52 percentage points in 24 months Click to see monthly returns in table format!

Lists

10 Most Influential Papers In Economics

Top 8 Biggest Charities in the US

10 Worst Celebrity Career Moves Ever

Top 10 Best Paid Tennis Stars in the World

10 Cities with High Demand for Nurses

6 of the Worst Greeting Card Messages Ever Crafted

6 Ways to Make Money in ArcheAge and Build Your Empire

10 Foods To Eat To Lower Cholesterol Levels

The 10 Most Hated Television Characters of All Time

The 30 Worst Halloween Costume Ideas Ever Brought to Horrible Life

10 Vocational Skills in Demand Today with Jobs Waiting to be Filled

10 Best Places to Visit in Central and South America

The 10 Greatest Empires in History Which Nearly Conquered the World

The 6 Cheapest Boarding Schools In America 2015

5 Clear Reasons LoL is Better than DotA, Continues to Rule MOBAs

The Only 9 Teams with a Chance to Win the Super Bowl

The 15 Most Common Phobias in America that Induce Fits of Panic

Top 6 Least Expensive Tourist Destinations in 2014

Jim Goetz, Peter Fenton, Jim Breyer: Top 6 Venture Investors for 2014

Top 15 Billionaires in 2014

5 Pitfalls To Avoid When Buying a Franchise

Top 20 Medical Schools in the US – 2014 Rankings

4 Business Strategies that Turned Jamie Oliver into the World’s Richest Chef

6 Qualities That Make You A Good Team Player

10 High Paying Seasonal Jobs in America this Holiday Season

The 10 Busiest Shipping Lanes in the World

5 Most Valuable Brands in China

The 10 States with Highest Substance Abuse Rates Crippling Their Populace

The Top 10 Things to Do Before You Die That Will Echo for Eternity

The 10 Best Selling Items on Etsy

Top 10 Things to Do in Tokyo, the Greatest City in the World

10 Mistakes on Social Media that Can Harm You and Will Probably Get You Canned

The 10 Best Cities to Find Jobs in 2014

The 10 Most Controversial Songs Of All Time to Hit (and get Banned from) the Airwaves

The 20 Biggest IPOs in US History

The 10 Best Places to Visit in Mexico that Are Beautiful and Safe

7 Bad Habits that Age You Beyond Your Years

The 40 Best Fortune Cookie Sayings That Will Leave You Bemused, Befuddled, or Beguiled

10 Foods to Eat Before a Workout to Make Every Drop of Sweat Count

The 5 Best Documentaries On Netflix You Must See

The Most Heartwarming and Inspirational Story Of This Halloween Season, It Will Make You Cry and Jump For Joy

10 Best Party Songs of All Time to Bring the House Down With

5 New World Order Conspiracy Theories that Will Strangle the World

The 10 Highest Rated Movies of 2014

The 10 Largest Container Shipping Companies in the World

The 10 Largest Armies in the World: Who Should We Be Afraid Of?

Best Warren Buffett Quotes on Money You Need to Hear

The 10 Highest Suicide Rates by Profession

The 20 Most Underrated Movies of All Time

The 10 Fastest Growing Companies in America

Subscribe

Enter your email:

Delivered by FeedBurner

X

Thanks! An email with instructions is sent to !

Your email already exists in our database. Click here to go to your subscriptions

Insider Monkey returned 47.6% in its first year! Wondering How?

Download a complete edition of our newsletter for free!