Macaroni and Soy: New Kraft Dinner?

Cramer on Friday had a message for Kraft Foods, regarding its takeover plans:

“You guys are making a huge mistake trying to buy Cadbury,” the Mad Money host said.

With talk of a soda tax, Cramer wondered, a snack tax can’t be too far behind. So Kraft should forget about candy and focus on what more and more consumers want these days: natural and organic foods. The best play on that trend, he said, was The Hain Celestial Group .

Hain Celestial makes everything from its market leading Celestial Seasonings tea, Earth’s Best baby food, diapers and wipes, Terra Chips and Spectrum culinary oils, condiments and butter substitutes. People are making healthy choices, switching out dairy for soy, and this is one company that makes them possible.

“Hain is the future,” Cramer said, and Kraft should buy it.

Stores shelves are the battlefields of packaged-food companies. Whoever controls that space, obviously, has better access to the consumer. A quick look in two popular New York groceries, Whole Foods and Gristedes, showed that Hain Celestial is winning its war against Cadbury . In fact, the latter occupied no shelf space at all in the Whole Foods his research team checked, in Union Square.

Admittedly, this is a “purely and absolutely anecdotal” study, Cramer said, but it does indicate, to an extent, where the food business is trending – toward the healthy products of Hain and away from Cadbury’s candy, “which rots your teeth [and] makes you fat.”

But Cramer never recommends a stock on just its takeover value. He needs strong fundamentals, too, and Hain has those. After reporting its fiscal fourth quarter, ended June 30, sales were up 7% year-over-year, gross margins increased 1.56%, and the balance sheet improved, with it holding $41 million in cash and $258 million in debt.

The company continues to launch new products as well: wellness teas, gluten-free vegetable chips, which already are in 2,500 Walmarts, and a Martha Stewart -branded line of natural cleaning products, coming this fall. The stock, which trades at 14.3 times 2010 earnings with a 15% long-term growth rate, looks cheap, considering the strength of the business. He thinks HAIN could double on its own, “even without a takeover.”

Still, Kraft should buy Hain Celestial and not Cadbury, Cramer said. But even if CEO Irene Rosenfeld decides against it, “I wouldn’t be surprised if somebody else doesn’t take a shot at it.” That’s why he thinks HAIN is a buy.

Call Cramer: 1-800-743-CNBC

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