Hold on to the former Sara Lee

Article Excerpt

Like Kraft (see page 111), Sara Lee Corp. recently split into two separate companies: U.S.-based Hillshire Brands and Holland-based D.E. Master Blenders. Both stocks have stayed in a narrow range sincethe split in June 2012. That’s partly because investors often dump new shares they didn’t want. As well, few brokers cover these new companies. However, spinoffs tend to pay off for patient investors. Their smaller size could also make theses two new companies attractive takeover targets. HILLSHIRE BRANDS CO. $27 (New York symbol HSH; Conservative Growth Portfolio, Consumer sector; Shares outstanding: 122.3 million; Market cap: $3.3 billion; Price-to-sales ratio: 0.8; Dividend yield: 1.9%; TSINetwork Rating: Average; www.hillshirebrands.com) makes a variety of packaged meat products. Its main brands include Ball Park hot dogs, Jimmy Dean sausages and Hillshire Farm deli meats. Its other foods include Sara Lee frozen desserts and Chef Pierre pies. If you disregard costs related to the breakup and other unusual items, Hillshire would have earned $62 million in its fiscal 2013…