In the battle of the snack-food makers, which company comes out on top? Jim Cramer looked at snack kings Mondelez International Inc. (MDLZ) and Hershey Co. (HSY) during his Mad Money program to find out who reigns supreme.
Both are well-run companies, Cramer said, but they do differ in a few key areas. MDLZ, for example, derives most of its revenue from overseas, which lets it benefit from a weaker U.S. dollar. Meanwhile, HSY has superior revenue growth, gross margins and earnings.
Cramer said that while he likes Hershey the company better, the stocks tell a different story. Both stocks pay around a 2% dividend, but Mondelez is less expensive at 20 times earnings, compared to Hershey at 24 times earnings. For that reason, Cramer said he'd be a buyer of Mondelez for right now and would wait for a pullback on Hershey.
Now let's look at the charts and indicators and see what the technicals say.
In the daily bar chart of MDLZ, below, we can see a strong uptrend after the late-December low. Prices have stayed above the rising 50-day moving average line and the bullish 200-day line, but we are close to seeing a test of the 50-day line. The daily On-Balance-Volume (OBV) line shows a rising pattern from late December but the line has leveled off or stalled the past six weeks.
The Moving Average Convergence Divergence (MACD) oscillator has been in a take profits sell signal from June. The oscillator is not far above the zero line and a possible sell signal.
In this weekly bar chart of MDLZ, below, we can see that prices are extended above the rising 40-week moving average line. The weekly OBV line has moved up from December but the line has been stalled in recent weeks. The MACD oscillator has narrowed the past month and is close to crossing to a take profits sell signal.
In this Point and Figure chart of MDLZ, below, we can see an upside price target of around $66.
Bottom-line strategy: MDLZ can always be bought but right now we see enough signals suggesting a shallow correction is possible in the days ahead. Let's look to buy around $52 or so, risk below $50 and target $66.
In this daily bar chart of HSY, below, we can see a strong chart and indicators -- potentially stronger than MDLZ. Prices are above the rising 50-day moving average line and the bullish 200-day line. The OBV line shows a bullish rise the past twelve months and the MACD oscillator turned up to a fresh buy signal earlier this month.
In this weekly bar chart of HSY, below, we also see bullish signals. Prices are above the rising 40-week moving average line. The weekly OBV line is bullish and so is the MACD oscillator.
In this Point and Figure chart of HSY, below, we can see a potential $174 price target.
Bottom-line strategy: All three charts of HSY are bullish and the Point and Figure chart gives us a bigger target than MDLZ. Like Cramer, I would be a buyer of HSY but I suspect we will only have a sideways correction to buy.