Sunday, August 31, 2008

HNZ : HJ Heinz strategic trademarks

There is not a single house in North America that doesn't have a Heinz product in it. I actually have to buy their brand when buying these categories of products, that is because their recipe is way better. This kind of trademark force is what pushed Coke for so long. In this times of economic uncertainty, I feel confident that Heinz will retain most of their retail and institutional clients. For the retail clients, it's clearly the taste of the product that makes it. For the institutional clients, that is the prestige that Heinz's logos bring to another product or service. The real reason why I have a buy rating on this company is that the stock is just setting new 5-year highs and the stock is currently pulling back to create a buy opportunity. I believe the stock will ultimately go higher, if you look at monthly and weekly charts, the futures looks great. On the weekly time frame, the stock might need to go lower but as on the daily, the pullback is happening.

The best place to buy the stock would be when the price is at the 50dma or around and there is a up day with volume very high compared to average volume. This type of pull back on HJ Heinz occurred twice already this year(05/27/08 and 07/07/08)


but may not occur again. However, I think the 50dma is a support that the price tried to break several times since the price went from below to over the 50dma in early March. The chances that HNZ would drop drastically are thin compared to a lot of stocks not as well positioned in this time of economic uncertainty.

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