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A Rare Bargain in the Packaged Food Aisle

Wide-moat Kellogg looks attractive for investors today.

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Erin Lash: We’ve long held that the merits of Kellogg's move away from direct-store distribution (in favor of warehouse delivery) in 2017 would prove advantageous. But the market has been more skeptical, with shares edging up less than 3% between January and July 2019, versus a nearly 20% appreciation in the Consumer Staples Index over the same period.

From our vantage point, this divergence reflects Kellogg's failure to boast an improving top line as of yet (unlike peers). However, with its revised strategic playbook, we think Kellogg is poised to crack the code on profitable and sustainable sales growth.

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Erin Lash does not own shares in any of the securities mentioned above. Find out about Morningstar’s editorial policies.