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No. of Recommendations: 4
H.J. Heinz (NYSE: HNZ) grew its net income 8.6% due mainly to growth in emerging markets. However, revenue growth in the U.S. and Europe remained constrained, as consumers in these areas continued to reel in their spending.

The company’s investments in emerging markets appear to be paying off. CEO William Johnson stated “Emerging Markets are driving our growth this year and are on track to generate at least 20% of the Company’s total sales by 2013.” H.J. Heinz indicated that it will continue to look for ways to expand its presence in these markets including additional acquisitions, such as its recent acquisition of Foodstar, a leading manufacturer of soy sauce in China.

Operating cash flow came in strong, increasing to $297 million and H. J. Heinz raised its 2011 operating cash flow outlook by 15% to $1.15 billion. H. J. Heinz also reaffirmed its outlook for sales, operating income and EPS for Fiscal 2011.

H. J. Heinz remains a tasty buy on our scorecard. The company’s emerging markets initiatives have been quite successful, and revenue in the U.S. and Europe should rebound as the economic outlook for those areas begins to improve. And while we wait for an eventual recovery, we can continue to collect HNZ’s juicy 3.8% dividend.

Our Guidance: Buy
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