What Would Warren Buffett Think of These Moats?

However in a very candid presentation at the CAGNY conference in February the company admitted that it used to be known as the place where good ideas went to die. But since 2008 when 17 of 19 new product launches failed the company has regrouped with successful innovative launches like Oscar Meyer Selects and MiO water enhancers.Kraft is in the early stages of an innovation turnaround. Growth could be slower than Unilever plc (ADR) (NYSE:UL) and McCormick & Company, Incorporated (NYSE:MKC) but net revenue from new products has now doubled from 6.5% in 2009 to 13% in 2013.

What would Warren do?

McCormick has a strong moat in spices and fast growing demand globally. Its Chinese acquisition is especially promising. As a Dividend Aristocrat Warren would likely bless a buy for these reasons as well as its pricing power and growing free cash flow.

Unilever plc (ADR) (NYSE:UL) is a global brand powerhouse with pricing power and strong demand and management so this is another buy. Warren would also appreciate its high yield and expansion of its moat with emerging market exposure.

Kraft Foods Group is in the midst of a multi-year turnaround and its earnings and free cash flow trends look better. As the company returns to innovative new products it builds its moat even wider. Remember, Warren still holds shares of Kraft Foods Group so he hasn’t given up on this iconic company.

The article What Would Warren Think of These Moats? originally appeared on Fool.com and is written by AnnaLisa Kraft.

AnnaLisa Kraft has no position in any stocks mentioned. The Motley Fool recommends McDonald’s, PepsiCo, Sysco, and Unilever. 

Copyright © 1995 – 2013 The Motley Fool, LLC. All rights reserved. The Motley Fool has a disclosure policy.