What is a corporate spin-off and why does it matter for investors?

A spin-off happens when a company separates part of its business into a standalone company, often distributing shares to existing shareholders. For investors, spin-offs matter because they can unlock hidden value. When slower-growth or underperforming divisions are separated from high-growth segments, each new entity can focus on its core strengths. This often leads to better performance, management focus, and higher valuations for both companies. Kraft Heinz's potential $20 billion spin-off is an example of this strategy in action.

What is the "bigger is better" model in consumer packaged goods?

The "bigger is better" model refers to the strategy where consumer packaged goods (CPG) companies grow by acquiring many different brands and businesses across various food categories. The idea was that larger size would lead to cost savings, greater negotiating power with retailers, and marketing advantages. For decades, this led to the creation of enormous food conglomerates with diverse portfolios. However, as this theme highlights, the market is now often rewarding more focused, nimble companies that can quickly adapt to changing consumer preferences.

Why might a company's stock price increase after announcing a spin-off?

A company's stock price might increase after a spin-off announcement because investors see potential for greater value when businesses operate independently. When diverse businesses are housed under one corporate umbrella, the market often applies a "conglomerate discount" to the stock price. Separating high-growth units from mature businesses allows investors to value each business on its own merits. Additionally, focused management teams can make better strategic decisions for their specific business rather than competing for resources within a larger corporation. This improved focus and transparency often leads to higher combined value for the separate entities.

What does "legacy brand" mean in the context of packaged foods?

A "legacy brand" in packaged foods refers to an established, often decades-old product line that consumers widely recognize but that may be experiencing slow or declining growth. These might include traditional canned goods, cereals, or processed foods that were once pantry staples but are facing changing consumer preferences. While these brands typically generate reliable cash flow, they may struggle to deliver growth in today's market where consumers increasingly prefer fresher, healthier, or more innovative options. Companies are now considering separating these legacy brands from their faster-growing product lines to allow each to operate with appropriate strategies.

How do dividend yields relate to these packaged food stocks?

Dividend yields are an important consideration for many packaged food stocks, which typically operate in the consumer staples sector. Mature food companies often generate stable cash flows that allow them to pay regular dividends to shareholders. When a company undertakes a restructuring like a spin-off, investors should pay attention to how dividend policies might change. Sometimes the mature "legacy" business retains a higher dividend yield to attract income-focused investors, while the growth-oriented spin-off might reinvest more cash into expansion rather than dividends. Each company in this theme has its own dividend policy, which is noted in the stock data.

14 handpicked stocks

Unlocking Value in Packaged Foods

This carefully selected group of stocks captures companies that may follow Kraft Heinz's $20B spin-off strategy. Our investment professionals have identified players poised to create shareholder value by separating legacy assets from high-growth brands in the evolving consumer packaged goods sector.

Han Tan | Market Analyst

Published on July 14

Top Picks from This Group

Here are a few of the assets in this group. Create an account to unlock the full list.

Kellogg Co.

Current price

$82.65

Kellanova, having already spun off its cereal business (WK Kellogg), exemplifies the strategy of separating slower-growth assets to focus on its highe...

Kellanova, having already spun off its cereal business (WK Kellogg), exemplifies the strategy of separating slower-growth assets to focus on its higher-growth global snacking portfolio, making it a model for the KHC strategy.

Mondelez International, Inc.

MDLZ

Current price

$61.78

Mondelez, which itself was spun off from Kraft Foods Inc. in 2012, is a successful example of a focused snacking powerhouse that could be a benchmark ...

Mondelez, which itself was spun off from Kraft Foods Inc. in 2012, is a successful example of a focused snacking powerhouse that could be a benchmark for the new, streamlined Kraft Heinz entity.

Campbell Soup Company

CPB

Current price

$31.60

Campbell Soup has a diverse portfolio of meals, beverages, and snacks, making it a potential candidate for a similar strategic review to unlock value ...

Campbell Soup has a diverse portfolio of meals, beverages, and snacks, making it a potential candidate for a similar strategic review to unlock value by separating its different business lines.

ConAgra Foods, Inc.

CAG

Current price

$19.18

J. M. Smucker Company, The

SJM

Current price

$107.80

Post Holdings, Inc.

POST

Current price

$106.86

Join Nemo FREE today and unlock every stock.

It only takes 60 seconds.

12 Month Growth Potential

Use the growth calculator to see how much investing in these assets could return over one year, based on aggregated analyst sentiment provided by Refinitive Ltd.

If you invested across these assets:

≈

In 12 months it might be worth:

$1,000.00

+55.89%

≈

About This Group of Stocks

Our Expert Thinking

The "bigger is better" model in consumer packaged goods is being challenged. Companies that separate slow-growth legacy brands from high-growth product lines can unlock significant shareholder value. This restructuring trend, highlighted by Kraft Heinz's potential $20B spin-off, creates investment opportunities across the sector.

What You Need to Know

This collection includes three types of companies: potential restructuring candidates with diverse portfolios, successful examples of previous spin-offs, and specialized players already benefiting from focused brand strategies. While part of the defensive consumer staples sector, these stocks offer tactical growth potential.

Why These Stocks

These companies were selected because they either face similar pressures as Kraft Heinz to streamline their portfolios, have already successfully executed spin-offs, or represent the focused, nimble business models that larger corporations are trying to achieve through restructuring.

Group Performance Snapshot

55.48%

Average 12 Month Profit

On average, analysts expect assets in this group to grow 55.48% over the next year.

9 of 14

Stocks Rated Buy by Analysts

9 of 14 assets in this group are rated Buy by professional analysts.

Source: Analyst sentiment is provided by Refinitiv Ltd, a global leader in financial market data with over 40k business clients. Refinitiv Ltd is an independent third party to Nemo. This is not advice.

Why You'll Want to Watch These Stocks

🔄

Corporate Actions Create Opportunity

When big food companies restructure, the market often rewards both the parent company and the spin-off. These corporate moves can lead to significant stock price increases as each entity focuses on what it does best.

🚀

Unlocking Hidden Value

Many of these companies have valuable brands buried within larger portfolios. As they separate high-growth assets from legacy products, investors could benefit from the market's reassessment of their true worth.

🛡️

Stability Meets Growth Potential

Consumer staples typically offer defensive, dividend-paying stability, but this group adds a tactical growth angle through potential corporate restructuring. It's a unique opportunity to combine safety with upside.

Get the full story on this Basket. Read our detailed article on its risks and potential.

Read Full Insight

Why Invest with Nemo Money?

🆓

Zero Commission

Trade stocks, ETFs, and more with zero commission. Keep more of your returns.

🔒

Trusted & Regulated

Part of Exinity Group 2015, serving over a million customers globally.

💰

6% Interest on Cash

Earn 6% AER on uninvested cash with daily interest payments.

Discover More Opportunities

Gold Miners (Record High Rally) Investment Guide

Gold prices have reached a record high as concerns over a U.S. government shutdown and potential interest rate cuts drive investors to seek safe-haven assets. This trend creates a potential investment opportunity in the companies that explore for and produce gold and other precious metals.

Government Shutdown Impact: Defensive Stocks Explained

A U.S. government shutdown has been triggered by a congressional budget impasse, creating economic uncertainty. This theme focuses on companies in defensive sectors that may prove resilient to the resulting market volatility and disruptions in federal spending.

Zillow Redfin Competitors | Market Disruption

The Federal Trade Commission is suing Zillow and Redfin, alleging their rental listing deal violates antitrust laws. This legal challenge could disrupt the online real estate market, creating opportunities for competing platforms to capture market share.

Frequently Asked Questions

Everything you need to know about the product and billing.