We’ve had great success with companies spun off from larger parent firms in the past few years. That’s mainly because spinoffs let both companies focus on their already well-established businesses. As well, a parent will only hand out a subsidiary’s shares to its own investors if it’s confident the spinoff will benefit both companies.

Last week, we covered a spinoff that has been successful so far, Mondelez (see the article here). This week we examine the company that spun it off, Kraft Foods. We cover both of these stocks in our advisory on U.S. investing, Wall Street Stock Forecaster.

KRAFT FOODS GROUP INC. (Nasdaq symbol KRFT; www.kraftfoodsgroup.com) makes a variety of grocery products, including Kraft macaroni and cheese, Oscar Mayer meats, Philadelphia cream cheese, Maxwell House coffee, Jell-O desserts and Miracle Whip salad dressing.

While its spinoff Mondelez gets 80% of its sales from Europe and developing countries, Kraft prefers to focus on North America. Wal-Mart accounts for 26% of its sales. That hurts its growth prospects, but it also cuts its currency risk.

Kraft continues to reduce its costs following the breakup with Mondelez, mainly by consolidating facilities, laying off employees and eliminating less-profitable products. These moves are helping Kraft offset rising ingredient costs.

Lower costs were the main reason why Kraft’s earnings jumped 65.3% in 2013, to $2.7 billion, or $4.51 a share. If you exclude unusual items, it earned $2.84 a share. In 2012, Kraft earned $1.6 billion, or $2.75 a share.

Revenue fell 0.3% in 2013, to $18.2 billion from $18.3 billion, as strong competition forced Kraft to lower its prices.

Stock market advice: Shares up 26% since breakup with Mondelez

The company aims to spur its growth by improving its existing products and developing new ones. In 2013, new foods and other innovations supplied 14% of its revenue, up from 13.4% in 2012.

Kraft is also spending more to promote its products: advertising spending rose to 4.1% of its revenue in 2013 from 3.5% in 2012.

As of December 28, 2013, the company’s long-term debt was $10.0 billion, or 29% of its market cap. It also held cash of $1.7 billion, or $2.83 a share. This gives Kraft plenty of flexibility to buy back shares under its new $3-billion repurchase authorization. There is no time limit for these buybacks.

The stock is up 26% since the split with Mondelez. As well, Kraft recently raised its dividend by 5.0%. The new annual rate of $2.10 a share yields 3.7%.

In the latest edition of Wall Street Stock Forecaster, we examine Kraft’s growth prospects in light of its heavier spending on product development and advertising. We also look at whether its share price is likely to keep on rising. We conclude with our clear buy-hold-sell advice on this stock.

Kraft Foods reported its first-quarter earnings last week and we will review the results in an upcoming issue of Wall Street Stock Forecaster.

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Does a long-established consumer brand name like Kraft give you confidence as an investor? Do you have “household name” stocks that have done very well for you? Do you also have an example of a famous brand name stock that was riding on its past laurels and went into decline?