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
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

Top 15 Best Paying Jobs for Women in 2014

Top 6 Things Rich People Do Differently Every Day

5 Retirement Mistakes To Avoid (and Einstein’s Famous Quote)

11 Smartest People in the World

6 Films About the Financial World You Need To Watch (While “The Wolf” is Not Around)

Warren Buffett and Billionaires Are Crazy About These 7 Stocks

The Top 10 States With Fastest Internet Speeds

10 Best Places to Visit in USA in August

Top 10 Cities to Visit Before You Die

Top 10 Genetically Modified Food In the US

15 Highest Grossing Movies Opening Weekend

5 Best Poker Books For Beginners

10 Strategies Hedge Funds Use to Make Huge Returns

Top 10 Fast Food Franchises to Buy

10 Best Places to Visit in Canada

Best Summer Jobs for Teachers

10 Youngest Hedge Fund Billionaires

Top 10 One Hit Wonders of the 90s

Fastest Growing Cities In America

Top 10 U.S. Cities for Freelancers

Top 9 Most Popular Free iPhone Apps

Top 10 Least Expensive Private Business Schools in the US

Top 15 Most Expensive Countries in the World – 2014

Top 6 Tax Scams and How to Protect Yourself

Top Businesses to Invest In

Top 5 Things You Might Be Doing Wrong With Your Business

Top 5 Strategic Technology Trends in 2014

Top Rags to Riches Stories

Parenting Behavior That Promotes Future Leaders

Top 5 Mistakes Made by Small Businesses

Top 5 Most Common and Potentially Devastating Financial Blunders

Top 5 Highest Paying Jobs for Web Designers

Top 6 Most Respected Professions that Also Pay Well

Top 5 Pitfalls Investors Should Avoid

Top 6 Lawyers and Policy Makers Under 30

Top 6 New Year’s Resolutions for Entrepreneurs

Top 7 Locations to Check in on Facebook

Top 5 Mistakes made by Rookie eBay Sellers

Top 7 eBook Publishers in 2013

Top 6 Health Industry Trends in 2014

5 Lessons for Entrepreneurs from Seth Godin

Top 5 Success Tips from Jordan Belfort – the Wolf of Wall Street

Best Master’s in Finance Degree Programs

Top 6 Earning Celebrities Over 50

The most expensive sports to play

Top 7 Earning Celebrities Under 25

Best 7 Online Courses to Take: Free Finance MOOCs

Top 6 Bad Habits that Promote Failure

20 Most Valuable Soccer Teams in the World in 2013

12 Most Expensive Countries for Foreign Students

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!