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Mondelez and PowerBar Parent Look Resilient in a Downturn

Shares of snack maker Mondelez and PowerBar parent Bellring are two top picks of Cowen analyst Brian Holland.

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Death and taxes may not be the only constants. To that list we might add the comfort foods that people embrace, particularly when times are tough. That’s good news for companies that make all things salty and sweet.  

To snack or not to snack is no longer the question: One of the seemingly permanent changes ushered in by the pandemic is the propensity to nosh on goodies between meals (although some of us dedicated grazers were doing it all along). Rather, investors need to ask themselves what Americans choose to eat when they’re not sitting down at the dinner table—healthy options or more decadent treats?  

You probably already know the answer, but Cowen analyst Brian Holland is here to remind you. “There is a time to diet, and a time to indulge—at present, we are firmly in the latter,” he writes in a research report. Or put more formally, “in the context of transience versus permanence, we see indulgence momentum persisting over the next 12 months in a challenging macro environment.”

Holland took a look at the snacking landscape on Wednesday, noting that after the at-home baking craze of the pandemic, a more-mobile America is once again favoring convenience, to the marked benefit of public companies that are leveraged to snacking. His survey of consumers found they are increasingly choosing indulgent snacks—good news for companies such as
Mondelez International
(ticker: MDLZ), one of his top picks, and
(HSY)—although that has not surprisingly led to weight gain in the past year.

At least we can blame the economy: His research shows that indulgent comfort snacks have continued to dominate even as the pandemic wanes—a pattern that’s held true in past times of economic uncertainty as well.

Still, we deserve some credit. Much like in other areas of retail, there’s some bifurcation happening, as many consumers, particularly on the younger side, are choosing what he terms “active nutrition,” or what might be called better-for-you snacks. These aren’t like the weight-loss offerings that are still selling in volumes that are below prepandemic levels. The snacks in focus now are those with simple ingredients or workout-friendly components, such as shakes and protein-packed bars.

For this segment of the market, his top pick is sports nutrition and PowerBar maker
Bellring Brands

Barron’s has previously highlighted Oreo maker Mondelez as an attractive option in the pricey consumer staples space, most recently before its third-quarter results, reported in early November. That beat-and-raise report led to share gains, and the stock is up well over 14% since that recommendation.

The stock isn’t quite the bargain it was in the fall, and the compay’s global bent means that the strong dollar remains a headwind for Mondelez. Yet other catalysts, including strong pricing power, little private-label penetration in its categories, and dominant brands, remain intact.

That should hold true even in the case of a downturn. Taking a cue from the lipstick effect, with makeup brands holding up well during recessions, perhaps the cookie really doesn’t crumble because snack sales endure as affordable indulgences.

Ultimately we agree with Holland, who has an Outperform rating on Mondelez stock with a $72 price target. He rates Bellring Brands stock at Outperform with a $31 price target, and rates
stock at Neutral with a $243 price target. It’s the season for all things sugar, spice, and everything nice. That goes for investments too.

Write to Teresa Rivas at


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