Cramer: Hershey is 'king of snacking,' but Mondelez stock is a better buy

Cramer: Hershey is 'king of snacking,' but Mondelez stock is a better buy



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“Given how much Hershey’s stock has run, I feel much more confident and comfortable buying the stock of Mondelez here,” CNBC’s Jim Cramer says.

right now there is a fabulous bull market in snacks a bull market led by Mondelez and Hershey both of which have exploded high recent months these are both great companies but because I'm a big believer in diversification I don't look too kindly on owning two stocks in the same industries you know from when we play am i diversified now if you're trying to match a portfolio of 5 to 10 stocks in your mad money portfolio right because if you all more than that doing no homework or your whole is going to turn into a part-time job and by the way you'd be a mutual fund think of it like this think of it like the movie Highlander there can only be one so if you're only going to buy one best to repackage food stock which of these two snacking kingpins should it be Mondelez or Hershey now I recommend a model is repeated in recent months I think they have a terrific handle on snacky with an extensive portfolio of brands like Nabisco Oreos Chips Ahoy Toblerone Nilla wafers tried and come hey let's throw in some other gun here let's throw in dentine Tate's bake shop my personal favorite among many other Brits it's been a big winter for us then last month we highlighted the incredible transformation of Hershey which is gone from a company mostly focused on candy like chocolate to a more diversified snacking play thanks to a series of brilliant acquisitions stocks already run so much that I told you to wait for a pullback before doing any buy turns out I was too cautious again as Hershey is tacked on another nine bucks since then practically in a straight Lobby that's highly unusual people though as you know from the top of the show these stocks are working so which of these two is the best snacking company and which is the best snacking stock you know there can be different things these are both incredibly well-run companies under the leadership see your dirk van van to put Mondelez has turned itself into a lean mean money-making machine hey we spoke to him in May he told a very compelling story there snacking but because it's a lifestyle change consumers are more on the go the more out of home Millennials particularly don't really want to sit down and have a big meal they they want to sort of fuel themselves and they eight seven times a day and so snacking is really growing as a as a as a habit and also the market is as a consequence I can be a Malayan onnum anyway in other words the snap book where's my wife like that so much what the all the static category is on fire because menos have some crazy version eating actual meals and madeley's has been leaning into that shift in consumer taste meanwhile companies got a huge international business where they're very good at tailoring individual products to what people like in a particular market if you go to Italy you stop in Italy Road sup it is just mountains of Mondelez mounds they like Toblerone cabins now for many months of we've been hearing that Model Ts was trying to buy our nots that's a baked goods brand from the Campbell Soup the last month they walked away hey you know what I'm kid it shows the fan who puts discipline he's not gonna overpay two weeks later the company bought a majority stake in perfect snacks that's a major player and refrigerated nutrition bars you know perfect right this wouldn't still tiny but the nutrition bar category is growing I love that the staff actually haven't refrigerated it's cold it's very thoughtful alright how about her see under the leadership of CEO Michelle buck who is just completely under the radar screen this thing is caught fire just like Vienna plated model ease now she took over in 2017 she's diversified away from candy be a series of mid-sized acquisitions namely skinny pop and Irish booty I love this stuff okay these deals have breathed new life into companies once stagnant growth rate meanwhile she's cut costs and she's gotten more aggressive about expanding overseas although her she's still heavily concentrated United States wow they got a green field overseas though lots of runway like I said they booked up great stories but how do they stack up against each other quantitatively which is what I want to teach you how to do let's go through the major line arms or an apples-to-apples base to see you can do this at home first and foremost we care about revenue growth that's why these two stocks have outperformed the rest of the packaged food space laugh they they cut bite growth last year mind at least delivered 2.4 percent organic revenue growth which accelerated three point seven ways quarter going for the ants are looking for just point one percent net revenue growth this year but they'd never pick you up to more like three percent in 2020 2021 now that meant may not sound like much compared to the turbocharged growth you're now getting coca-cola as I mentioned top of show but they consistent numbers people like that Percy Weston they delivered just 0.3 percent organic growth although that is sorry to 1.9 percent of latest quarter going forward Wall Street's looking for about 2% net revenue growth annually through 2021 this is a tough one ma Gliese has the better organic growth in recent years internally generated growth that doesn't come from acquisitions when you look at total sales her she wins while we normally look at these numbers on a constant currency basis meaning we adjust for foreign exchange fluctuations you need to know that Mondelez is getting crushed by the strong dollar they get seventy five percent of their sales from overseas her she gets eighty four percent of their sales from the coudl united states as long as the dollar stays the Strunk I think her she wins unquote however if we see a major pullback in the greenback that will get in but you sure have it it's the strongest ever today that will give Mondelez a gigantic boost and put Italy all right how about margins what they have left both companies yesterday so both companies have been very good about controlling costs in the last few years though her she delivered some stance and were margin improvement whether you'll get the gross margin what they make after the cost of goods sold or in the operating margin the percentage of sales that are left over as earnings before paying interest or taxes boom here we go in terms of earnings Hershey and monthlies have had pretty similar profiles as thoroughly however this year her she's pulled ahead in the first quarter they posted 13% Ernie squid versus 5% for model ease and for the full year the analyst so looking for 7% growth versus 3% per model ease when the other hand model these numbers are expected to accelerate to 7% in twenty twenty one twenty twenty and twenty to one while Hershey's may slow about six percent still this is another one where I have to give the edge to Hershey especially since this is really important to get all the analyst who hated the stock switching to buy their main competitor is a private company called Mars and Mars just put through a nine percent price increase when single-serve chocolates that is her secret raising prices to again like at the top of the show I see these companies have pricing power while model eases some chocolate exposure with CAD Brite was really really good brand chocolate is still Hershey's core business that's Kevin I like camera how about overall quality of the recent acquisitions master model II snapped up Tate's big shot now this makes the wishes crispy cookies and guys from Manos you can keep sending us says they sent us one all the time I love it now this was formerly known as Kathleen's cookies for those who spent a lot of time in the Hamptons her she picked up skinny pop okay and Pirate's Booty who wins again I have to give the edge to her she don't get me wrong I love love love Tate's plus okay I had more importantly a wicked unrequited crush on Kathleen herself but her she's recent acquisition have allowed themselves to diversify into whole new categories whereas my lease didn't really diversify here they made they already made cookies right I mean come on uh although it's sacrilegious I think really to even include Tate's the same category as the humble Oreos by the way completely required love if you want to know the truth overall I think her she's pretty clearly a superior company although not by wide margin for poor the analysts are so negative 1 to 1 by wonders they gotta go bye bye bye bye bye for the syllabi what about the stocks while they have similar dividends 1.9% for bond at least 2% for her she can not as good as the two stocks that talked about the top Kim believer coca-cola they're very different valuations mine Lee sells for 20 times next year's earnings estimates her she sells for 24 times Mondelez is actually a little cheaper than the average packaged food stock which is strange given hell it's getting superior operator Hershey's is great but it's much closer to getting the high valuation it deserves Plus both companies reporting very soon and I think Mondelez has the better set up going into earnings Hershey is caught a series of upgrades in the last month's that I mentioned analyst catching up stock has rallied more than 25 percent is less that are important when we hear from them on Thursday I suspect it'll be hard for the stock to rally my on the leaves the other him reports in a week and it's up less than 8% since the last quarter I'm liking this one so who's the new king of snacking bottom line is that Hershey is the better company but that's already baked in when it comes to their stock given how much Hershey stock this one I feel much more confident and comfortable buying the stock of Mondelez here but if her she sells off despite we're pretty good numbers later this week you gotta be ready pants let's go – Sam you can't be standing yeah big whoo you got some Topeka Kansas Jim thanks for taking my call right back atcha with the recent changes that canopy growth on the CEO are you still optimistic on that I am but remember the whole group is under a lot of pressure still remains canopy's number one and Cronus's number two but GW Pharma is the one that people want because that's the one that the FDA is blessing and they're not cutting a break to canopy Wow all right sometimes sometimes it just doesn't come together perseus up nice for like a snack right now it sells off you get you gotta be absolutely ready to pounce on this one okay why always isn't bad by either all right much more made money up in the business the shark tonight Daymond John from shark tank is Lenny's entrepreneurial I help spot the markets next hot trend so come on in no water may be fun then looking for a guru in this market I'll tell you why it might be time to think again and the lawyer calls rapid fire in tonight's edition of the lightning round so stay with Kramer don't miss a second of Mad Money follow at Jim Cramer on Twitter have a question tweet Kramer hashtag bad tweets send him an email to mad money at cnbc.com or give us a call at one eight hundred seven forty three CNBC miss something head to Mad Money does cnbc.com you you you

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