Stocks to Whet Your Appetite
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The food industry is the bellwether of an economy, as it's supposed to be the last to be hit by a recession. The point is, consumer staples shall always be one of the safest bets for an investor. Take a look at these mouthwatering winners.
J. M. Smucker (NYSE: SJM) came up with its earnings last week and delivered an adjusted EPS of $1.29 against estimates of $1.15. Its current EPS was around 17% higher than the EPS of $1.10 in the same quarter last year. Revenue matched estimates at $1.34 billion, but were about flat with last year. The numbers, apart from the marginal revenue decline, spell success for the company.
The company’s shares fell strongly post declaration of results, only to soon regain much of what it lost. It traded at strikingly high volumes with more than 4.8 million shares exchanging hands in June, more than double its average trading volume. The additional volume seems to indicate investor confidence.
J. M. Smucker has a strong brand that's been around for over a century now. The only thing that doesn't look great is its decline in free cash flow. Still, this should be a short term condition.
Long term, it has been able to continuously showcase growth in all aspects of its business. And let's not forget the commendable performance of its stock price. It's also trading at a earnings multiple right around that of the market. If you like jelly and performance, the time may be right add shares.
Brands for days
ConAgra Foods (NYSE: CAG) jostles with J. M. Smucker to get into our tummies. In addition to some very well known brands, like Chef Boyardee and Peter Pan, the company is in the commercial food business and supplies to restaurants and other institutional buyers alike.
For some time now, the company has been going the acquisition route with 7 acquisitions over the past 2 years, the latest being Ralcorp in January. Ralcorp is a private foods maker and should help open many new avenues for ConAgra. And that's because Ralcorp will help it appeal to more value conscious customers. Also process and technology integration will lead to economies of scale and convert into cheaper production costs coupled.
The company has been returning wealth to shareholders at an ever growing rate over the past 5 years. It currently trades with a forward earnings multiple around 13, which is fairly cheap considering its brand presence. ConAgra is scheduled to report earnings soon, perhaps now is a good time to look at the stock.
Tastes like chicken
When it comes to meat and related products, Tyson Foods (NYSE: TSN), is an expert in this sector. It has been able to register growth over the past year, despite some cyclical headwinds. It appears there is a current decrease in demand for packaged food and rising prices for animal feed.
Despite a downtick in operating earnings, it has been able to achieve an increase of 23% in its free cash flow. Going forward, demand is expected to loosen up and expansion in Japan could be big. It currently trades at an multiple around 17, the least in the lot of all the companies mentioned. It also has a forward earnings multiple around 10 which seems to indicate a good price and solid future earnings.
Some tough times may be coming and that means the consumer food industry is one of the safest places to invest. ConAgra and J.M. Smuckers are undoubtedly best buys. But Tyson also seems to be performing well. In fact, its tough to go wrong with any of these 3 consumer food giants. Perhaps its time for you to fill your fridge, I mean portfolio, with these fine food operators.
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prateek attalani has no position in any stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. Is this post wrong? Click here. Think you can do better? Join us and write your own!