The Kraft Heinz Company (KHC): A Bull Case Theory

We came across a bullish thesis on The Kraft Heinz Company on Waterboy’s Substack by Waterboy. In this article, we will summarize the bulls’ thesis on KHC. The Kraft Heinz Company's share was trading at $28.56 as of July 29^th. KHC’s trailing and forward P/E were 13.04 and 10.99, respectively according to Yahoo Finance.

Kraft Heinz (KHC), one of the world’s largest food and beverage companies, currently trades at $28.68, well below its 52-week high of $36.53, with a market cap of $33.94 billion and an enterprise value of $52.90 billion. The company owns a roster of iconic brands, Kraft, Heinz, Capri Sun, Lunchables, Jell-O, and others—and has the backing of Berkshire Hathaway, which holds a 27.3% stake.

While Warren Buffett acknowledged at the 2019 Berkshire annual meeting that Heinz was fairly valued, he admitted they overpaid for Kraft, casting a shadow over the merged entity’s long-term value creation. Today, however, KHC appears more reasonably priced, trading at just 9.2x earnings and offering a hefty 5.58% dividend yield, with modest share buybacks supporting returns. Despite earnings pressure, the market may be underappreciating potential catalysts.

There is growing speculation that KHC may pursue a breakup, possibly spinning off its slower-growth grocery segment while retaining its more profitable sauces and spreads portfolio. Such a move could unlock significant value, especially given recent food sector M&A activity—Mars and Ferrero acquired Kellanova and WK Kellogg at rich trailing P/E multiples of 26.9x and 29.1x, respectively—far above KHC’s current valuation.

If a breakup materializes, KHC’s parts could be worth materially more than the whole, and the current discount offers a compelling entry point for investors looking for upside optionality and a solid income stream. Even without a separation, the current setup suggests limited downside and potential re-rating as the market reassesses KHC’s sum-of-the-parts value in the context of broader food industry consolidation.

Previously, we covered a bullish thesis on The Kraft Heinz Company (KHC) by Kostadin Ristovski, ACCA, in April 2025, which highlighted deleveraging, stable cash flows, and defensive appeal. The company’s stock has depreciated ~3% since, as the thesis has yet to play out. Waterboy shares a similar view but emphasizes potential upside from a possible business breakup.

The Kraft Heinz Company is not on our list of the 30 Most Popular Stocks Among Hedge Funds. As per our database, 46 hedge fund portfolios held KHC at the end of the first quarter which was 43 in the previous quarter. While we acknowledge the potential of KHC as an investment, we believe certain AI stocks offer greater upside potential and carry less downside risk. If you're looking for an extremely undervalued AI stock that also stands to benefit significantly from Trump-era tariffs and the onshoring trend, see our free report on the best short-term AI stock.

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Disclosure: None.