Price hikes unlikely to hurt demand

Article Excerpt

MONDELEZ INTERNATIONAL INC. $64 is a buy. The company (Nasdaq symbol MDLZ; Conservative Growth Portfolio, Consumer sector; Shares outstanding: 1.4 billion; Market cap: $89.6 billion; Price-to-sales ratio: 3.1; Dividend yield: 2.2%; TSINetwork Rating: Above Average; www.mondelezinternational.com) makes cookies and crackers (Oreo, Ritz), chocolate bars (Cadbury, Toblerone), gum and candy (Trident, Dentyne) and Halls cough drops. Like other foodmakers, Mondelez is seeing higher costs for ingredients and transportation. A new deal with the union that represents workers at its U.S. bakeries will also increase its labour costs. In response, the company plans to raise its U.S. selling prices by roughly 6% to 7% in the first quarter of 2022. However, demand should remain steady as the re-opening of the economy is prompting more impulse buying of snacks. The company’s shares have gained 11% in the past year and now trade at 22.2 times the $2.88 a share that Mondelez will probably earn in 2021. That’s a reasonable multiple in light of the company’s strong brands and wide…