H.J. Heinz Co. $45 – New York symbol HNZ

H.J. HEINZ CO. $45 (New York symbol HNZ; Income Portfolio, Consumer sector; Shares outstanding: 316.9 million; Market cap: $14.3 billion; WSSF Rating: Above average) makes condiments, sauces, beans, pasta and infant food. Its flagship product, Heinz Ketchup, accounts for 60% of U.S. ketchup sales. Top brands include Lea & Perrins, Ore-Ida, and Weight Watchers. Heinz is starting to realize the benefits of its strategic plan. This includes spending more on new product development and marketing. The company is also targeting developing countries such as China, India and Russia for new growth. Emerging markets now account for 15% of sales (overseas markets as a whole supply 60% of Heinz’s sales). Heinz aims to double sales in emerging markets, as rising prosperity makes its products more affordable. In its third fiscal quarter ended January 30, 2008, Heinz’s earnings slipped to $218.5 million from $219.0 million a year earlier. However, per-share earnings rose 3.0%, to $0.69 from $0.67, on fewer shares outstanding. Sales grew 13.0%, to $2.6 billion from $2.3 billion. If you exclude foreign exchange gains, sales grew 8.6%. The stock now trades at 17.1 times the $2.63 a share Heinz will probably earn in fiscal 2008. The $1.52 dividend yields 3.4%. Heinz is a buy.

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