Mondelez International Inc (MDLZ), Kraft Foods Group Inc (KRFT), Hershey Co (HSY): 1 Huge Reason to Diversify and Buy This Global Giant

Page 1 of 2

Globally diversifying your portfolio is really important. It allows you to profit from the fast growth of developing economies, while also safeguarding your portfolio returns from regional economic woes. Let’s take a quick peek at the advantages of global diversification. Then we’ll examine one easy way to obtain it in your portfolio.

Hershey Co (HSY)

The promise and perils of investing overseas
The most obvious reason to diversify globally is to gain exposure to the developing world’s supercharged economic growth. In the past decade, developing economies grew significantly faster than developed ones. For example, developing Asian economies, including China and India, grew nearly 9% on average annually during the most recent decade. By comparison, major advanced economies’ GDP grew less than 2% per year.

By diversifying globally, you also hedge against regional economic downturns. For example, developing economies recovered more quickly than developed economies in the depths of the global financial crisis. But we’re now seeing robust recoveries in many developed markets and slowing growth in emerging ones.

A better approach
An effective way to balance the benefits and risks of global diversification is by investing in domestically based companies that achieve large percentages of their revenues internationally. And one company that’s an ideal example of global exposure is Mondelez International Inc (NASDAQ:MDLZ), which was born out of the corporate breakup of Kraft Foods last October.  The parent company, now called Mondelez, retained the higher-growth, higher-margin global snack food business. This left Kraft Foods Group Inc (NASDAQ:KRFT) the more sluggish North American grocery portfolio, including brands Velveeta, Oscar Mayer, and Jell-O.

As a result of the split, Mondelez International Inc (NASDAQ:MDLZ) gained staggering worldwide exposure. The company sells its sweet and savory goodies in 170 countries and holds the No. 1 position in the biscuits, chocolate, candy, and powdered-beverage categories worldwide. Amazingly, over 80% of Mondelez’s revenues are derived outside North America, with practically half from high-growth developing markets within Asia, Latin America, and the Middle East. Mondelez boasts a high level of emerging-markets exposure relative to most packaged-foods companies.

This global diversification has also aided Mondelez’s stock performance. During the past five years, an investment in Mondelez (using Kraft Foods Group Inc (NASDAQ:KRFT) data for the time period before the October 2012 corporate breakup) outperformed both the S&P 500 and an aggregate of its consumer goods peer group that includes corporate heavyweights like The Coca-Cola Company (NYSE:KO), H.J. Heinz Company (NYSE:HNZ), and Hershey Co (NYSE:HSY).

And a sweet product mix, too
Mondelez International Inc (NASDAQ:MDLZ) is not only diversified geographically, but also by product mix. Roughly 75% of Mondelez’s revenues come from the fast-growing snacks category, including biscuits and confectionery. The company’s confectionery category — which includes chocolate, gum, and candy — boasts brands Cadbury, Toblerone, and Trident, and contributes more than 40% of revenue.

Page 1 of 2
Comments
Insider Monkey Small Cap Strategy
Insider Monkey Small Cap Strategy

Insider Monkey beat the market by 52 percentage points in 24 months. Our beta is only 1.2 (don't click this link if beating the market isn't important to you).

Lists

The Best B-Boy Movies

Most Awesome Hip Hop Documentaries

Foods That Stain Your Teeth

Richest Doctors in the World

The Best Movie Sountracks Ever

The Highest Grossing Musicals on Broadway

The Most Successful Reality TV Stars

Cheapest Cities to Visit in the US

Most Expensive Summer Camps

Most Expensive Animals in the World

Most Expensive Specialty Crops in the World

Movies That Took Ages to Make

The Longest Hollywood Films Ever Made

Most Expensive Concert Stages

The Richest Bands of all Time

10 Most Corrupt Countries 2013 List

10 Countries with the Highest Quality of Life Index

Most Expensive Mattresses in the World

5 Smallest Countries by Land Area

The Ultimate Heartbreak Songs

Richest Teenagers in the World

10 Most Haunted Places in America

10 Best Places to Retire in Florida East Coast

Top 10 Places to See Before You Die

Top 8 Countries in the World Where Justice Prevails

10 Richest States in America

15 Wealthiest Countries in the World

Richest Singers in the World

Most Expensive Tasting Menu in New York City

Most Expensive Baby Items in the World

Most Expensive Hotel Suites in Vegas

Most Expensive Brunch in New York City

Most Expensive Beef Cuts in the World

25 Best Colleges to Get a Job

Top 10 US Supermarkets

The 25 Most Dangerous Cities in the World to Visit

Most Expensive Xbox Games

Top 11 Cities Where Billionaires Live

Top 10 Most Charitable Companies in America

Most Expensive Seafood in the World

The 10 Wildest Conspiracy Theories

The 10 Best Job Markets in the US

Top 10 Accounting Scandals of All Time

The 25 Biggest Cities in the World

Top 10 Best Paying Virtual Jobs

Most Expensive Leather Shoes in the World

Top 6 Things to Buy in March

The 10 Most Stressful Jobs in America – 2014 List

Top 10 Jobs for Introverted People

Top 10 Honeymoon Destinations in the World

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!