Dear Valued Visitor,

We have noticed that you are using an ad blocker software.

Although advertisements on the web pages may degrade your experience, our business certainly depends on them and we can only keep providing you high-quality research based articles as long as we can display ads on our pages.

To view this article, you can disable your ad blocker and refresh this page or simply login.

We only allow registered users to use ad blockers. You can sign up for free by clicking here or you can login if you are already a member.

Mondelez International Inc (MDLZ), PepsiCo, Inc. (PEP), Target Corporation (TGT): Three Big F&B Giants for Your Long Term Portfolio

Mondelez focuses its business on the BRIC regions (Brazil, Russia, India and China). The company has experienced a 9.3% year-over-year growth in revenue in the first quarter 2013, with double-digit growth in three important and heavily populated markets: India, China and Brazil. For the full year 2013, the company expected an organic revenue increase of 5%-7%, with the operating EPS of $1.55 to $1.60 per share. Mondelez International Inc (NASDAQ:MDLZ), at $29.50 per share, has a total market cap of $52.60 billion. The market values Mondelez at as high as 13.85 times EV/EBITDA and 19 times its forward earnings.

PepsiCo with its profitable Frito-Lay

Nelson Peltz has recently shown his interest in Mondelez International Inc (NASDAQ:MDLZ), as well as the world’s second biggest soft drink maker, PepsiCo, Inc. (NYSE:PEP), by investing around $2.7 billion in both companies. Many investors speculate that he might want Pepsi’s Frito Lay business to be spun off and merged with Mondelez. Frito-Lay North America is Pepsi’s biggest operating profit contributor, generating nearly $3.65 billion in profit in 2012, while PepsiCo Americas Beverages ranked second with nearly $2.94 billion in operating profit. If Frito-Lay was to be merged with Mondelez International Inc (NASDAQ:MDLZ), the combined company could be the most dominating food business in the world. With the operating profit of $3.65 billion, a simple 20 P/E would value Frito-Lay at as much as $73 billion. PepsiCo, Inc. (NYSE:PEP) is trading at $80.80 per share, with a total market cap of $125 billion. The market values PepsiCo, Inc. (NYSE:PEP) at around 12.5 times EV/EBITDA and 20.7 times its forward earnings.

My Foolish take

As those consumer goods giants are operating under conglomerate structure, a lot of value could be unlocked via a spinoff and business restructuring. With the global leading positions in the global food industry, all  three companies mentioned above could fit well in the long-term portfolios of patient investors.

Anh HOANG has no position in any stocks mentioned. The Motley Fool recommends PepsiCo, Inc. (NYSE:PEP). The Motley Fool owns shares of PepsiCo.

The article Three Big F&B Giants for Your Long Term Portfolio originally appeared on

Anh is a member of The Motley Fool Blog Network — entries represent the personal opinion of the blogger and are not formally edited.

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

DOWNLOAD FREE REPORT: Warren Buffett's Best Stock Picks

Let Warren Buffett, George Soros, Steve Cohen, and Daniel Loeb WORK FOR YOU.

If you want to beat the low cost index funds by 19 percentage points per year, look no further than our monthly newsletter.In this free report you can find an in-depth analysis of the performance of Warren Buffett's entire historical stock picks. We uncovered Warren Buffett's Best Stock Picks and a way to for Buffett to improve his returns by more than 4 percentage points per year.

Bonus Biotech Stock Pick: You can also find a detailed bonus biotech stock pick that we expect to return more than 50% within 12 months.
Subscribe me to Insider Monkey's Free Daily Newsletter
This is a FREE report from Insider Monkey. Credit Card is NOT required.