Food and Beverage large caps have had a roller coster 2010. Nestle stands out and is poised for further expansion as it’s total revenues are made
up of 35% from emerging markets. here’s why
1) Pricing power in these tough economic times that have seen consumers pull back in the last 3 years. It’s coffee, chocolate, beverage and especially PET FOOD businesses are key drivers in the emerging markets strategy. These businesses give NESTLE the ability to raise prices as the world economy remains sluggish.
2) NUTRACEUTICALS – A new intersection business between food and drugs! NESTLE has expertise in the growing lifestyle businesses of
“health & diet conscious businesses”. NESTLE can also leverage it’s competitive advantage in the infant baby formula business to gain externalities.
3) STOCK IS WELL POSITIONED – Nestle has more than $10 per share in cash and a 30% stake in L’Oreal. We forecast a 2011 EPS 12x projected earnings.
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