CNBC's Jim Cramer on Friday gave his take on Kellogg's decision to split into two separate companies, saying investors may want to wait and see how these stories play out before thinking about buying.
Kellogg's two businesses are now cereal-focused WK Kellogg and snack-focused Kellanova. Shares of both companies fell on Monday during their first trading session since the separation.
"The best I can say is you should sit these ones out," he continued. "Maybe someday Kellanova will be worth circling back to, but in a world where snack food stocks have gotten the cold shoulder, I don't think we're there yet."
Before the split, which was announced last year, snacks accounted for 80% of Kellogg's net sales in 2021. Popular names include Cheez-It, Pringles, Pop-Tarts, Nutri-Grain bars and Club Crackers. Despite its iconic cereal brands, like Frosted Flakes and Raisin Bran, Cramer noted the division had been a drag on the company.
Although he said he sees a better future for Kellanova than its counterpart, he added some weakness in packaged foods may rise from the popularity of GLP-1 weight loss drugs. He also said fewer people will want to buy dividend stocks while interest rates stay so high.
"You've really got to stick your neck out to buy Kellanova or WK Kellogg at these levels, and I don't think they're giving you much reason to take the risk," Cramer said.
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