IBD's Rising Profit Estimates screen finds top-rated stocks in which earnings are expected to accelerate. Food stock Mondelez International fits the bill perfectly, with earnings growth in each of the last six years. It is today's Screen of the Day pick.
Earnings growth is an important element in finding outperforming growth stocks. It's so crucial that the CAN SLIM investing strategy devotes two letters to it.
The "C" in CAN SLIM examines quarterly earnings and sales, especially in the last four quarters, while the "A" looks for annual earnings upticks.
Annual earnings-per-share analyst estimates and year-over-year percentage growth can be found on the weekly MarketSmith chart, in the upper left columns.
Food Stock Profits And Dividends Rise
The food and beverage sector can be seen as a defensive play, as food is a basic need even in hard economic times.
Mondelez brands include Oreo, Chips Ahoy, Triscuit, Cadbury, Trident and Sour Patch Kids. The Chicago-Ill. manufacturer also owns snack maker Nabisco and distributes products in over 150 countries.
The food stock is fourth in the Food-Confectionary industry group, which is ranked 61st out of the 197 IBD groups. It holds a respectable 85 Composite Rating and an 84 Relative Strength Rating.
Mondelez has raised its dividend for eight straight years. It currently offers an attractive $1.54-per-share payout, which translates into a 2.3% annual yield.
The snack giant reported better-than-expected Q3 2022 earnings and sales on Nov. 1. It projected full-year earnings to rise over 10%, excluding currency fluctuations, up from its previous single-digit forecast. This marks improvement over its 7% annualized rate in the last three years, according to IBD Stock Checkup.
Mondelez has produced consistent, modest single-digit quarterly EPS growth in the last two years. It now forecasts over 10% full-year organic net revenue growth vs. the previous guidance of 8%.
Snack Giant Acquires Popular Energy Bar Maker
The $90 billion company acquired energy bar maker Clif Bar for $2.9 billion in August 2022, as part of its growth plan. The addition brings Mondelez's global snack bar business to over $1 billion.
It raised prices this year on cookies and candies, citing higher costs for ingredients, transportation and labor, and plans another hike in the U.S. next month. The price increases could find their way into Europe in 2023.
"Consumers in developed markets continue to prioritize groceries over other forms of spending, and they continue to view our brands as affordable indulgences," said CEO Dirk Van de Put. He added, "We see consumers saying that chocolate is something they cannot live without."
Leading Food Stock In The Buy Zone
MDLZ passed the 65.06 buy point of a cup-with-handle base earlier this week and is in the 5% buy zone, which stretches up to 68.31.
The food stock is now trading about 5% off its 52-week high and has been trending higher since the earnings report earlier this month, finding support at its 200-day moving average.
Shares have now carved three back-to-back cup-with-handle bases but haven't found the catalyst needed to break this weak momentum.
