Campbell Soup Company: the first class first course

Among the most widely recognized product taglines in the English speaking world are "M'm! M'm! Good!," "Wow! I could've had a V8!," "Uh-oh SpaghettiOs" and "Pepperidge Farm Remembers." Guess what? They all belong to the same Camden, New Jersey firm.

Campbell Soup Company (NYSE:CPB) is a global manufacturer and marketer of soups, baked snacks, vegetable-based beverages and chocolate products. Founded in 1869, the company has a portfolio of market-leading brands, including Campbell's, Pepperidge Farm, Arnott's, V8 and Godiva. The firm is the biggest soup maker in the world. It controls nearly 70% of the U.S. market.

Campbell pleased investors last month when it announced fiscal second quarter EPS that topped analyst estimates and revenues that essentially matched the consensus view. Management also offered solid upside guidance for FY07 earnings. The CEO attributed success to solid gains in condensed, ready-to-serve and broth soups and remarked that he was encouraged by the early performance of the firm's lower-sodium offerings. CPB shares popped on the news and have since been consolidating the gain in a bullish "flag" pattern. Stocks frequently exit flags moving in the same direction they were traveling when they entered them. In this case, that would be to the upside.

Brokers recommend the shares with two "strong buys," three "buys" and fifteen "holds." The CPB P/E ratio (20.80), EPS Growth rate (24.55%), Return on Assets (11.00%), Return on Investment (16.61%) and Return on Equity (50.91%) compare favorably with industry, sector and S&P 500 averages.

Institutions hold about 45% of the outstanding shares. The stock is one of those used to calculate the S&P 100 and S&P 500 Indexes. Over the past 12 months, it has traded between $30.75 and $42.65. A stop-loss of $35.00 looks good here.

Larry Schutts is a contributing editor for Theflyonthewall.com and the Vice-President of Stockwinners.com.