CNBC’s Jim Cramer explained Thursday why he’s pretty positive about Magnum Ice Cream Company. Magnum Ice Cream Company, spun off from the consumer products giant, made its Wall Street debut earlier this week. unilever.
“Now that Magnum Ice Cream Company has been spun off and begins trading independently, by the grace of God, or at least the grace of Unilever, we finally have a pure ice cream stock,” he said. “And when you look at the story more closely, I have to say it’s pretty neat.”
Magnum Ice Cream may do better as an independent company than as part of a large conglomerate, Kramer suggested. He said the company struggled for a while under Unilever, but business has improved since the dessert maker started spinning off into separate companies. He said the improvement could be partly a result of the company’s autonomy and ability to focus on its products.
“Unilever needed to focus on its category, and it needed a real focus on ice cream,” Kramer said, citing comments made by Magnum Ice Cream CEO Peter Ter Kulve to CNBC. Ter Kulve said his company can now capitalize on its “growth opportunities” without having to “balance between all sorts of different categories for Unilever”.
Kramer emphasized that Magnum Ice Cream is the biggest player in the field, owning some of the world’s biggest brands including Wall’s, Ben & Jerry’s, Cornetto, Briar’s, Good Humor, its namesake Klondike, and Talenti Gelato. Magnum Ice Cream has a 21% global market share, Kramer noted, which is nearly double that of its major competitors.
Kramer said Magnum Ice Cream also appears to be able to adapt to the rise of GLP-1 weight loss drugs, even though the broader snack and junk food industry has been hurt by the trend.
Kramer said now may be a good time to buy the stock, as its price-to-earnings ratio is lower than many of its packaged goods peers. Mondelez, hershey And Nestlé. However, he acknowledged that while those companies are expected to see revenue growth next year, Magnum Ice Cream is expected to make a small loss.
“Still, the stock is trading at a significant discount relative to its peers,” Cramer said. “So if you want to bet on the ice cream business, you can buy it here.”
Magnum Ice Cream did not immediately respond to a request for comment.
