Mar. 26 at 1:24 PM
Falling knife 🔪 🩸… but
$GIS is undervalued, it will bounce, chop sideways. There is core staying power to
$GIS $KHC $CPB
…. Usually they trade 100-300 BPS above junk bonds,
$JNK is around 6.5%. In the past tobacco was viewed as structural impaired and had MO & BTI 9% … these snackers are 6.8 7.4 7.5. You could see 8/9% yields. Famously, pipelines all hit 10/11% in 2020, peak dividend cut fears. The fear today is store branding taking lower K and GLPs cutting snacking from mid to upper k.
I have countered 1.) brand innnovation quality and a core consumer 2.) GLPs see waining effects at 12-18 months, they wear off and cravings return. The peak RoC on these two forces occurred from 2023 to 2026, equilibrium 2027+.
I see
$GIS going sideways between 30-45…
$25-
$30 requires the global oil shock recession sell off.
