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As the economy continues to struggle and unemployment remains high, food stocks have held up very well. Everyone has to eat, right? Campbell Soup (NYS: CPB) might be a tastier meal than most. Last week the company reaffirmed its 25 cents per share dividend, giving it a yield in the 3-4% range. The Piqqem Sentiment for Campbell is a strong positive with sentiment trending upwards over the past month.Campbell's did announce diminished guidance for the upcoming quarters as a result of slowing sales. Most likely, this came as more and more consumers substituted out of premium brands for super market white-labels. The good news on this is that such substitutions, while bad for volume, strip out less loyal customers.
This means Campbell's should expect pricing power going forward as shoppers who reach for Campbell's are the one's that will pay more Campbell's and its brands because they prefer them strongly to white-label offerings. Over time, that's very good for margins. The company's forward P/E is a paltry 12, which reflects the slowing market but is on the low-end for a highly regarded consumer brand. At a minimum, Campbell's is a warm bowl of soup in a cold economy with strong brand loyalty and pricing power. On the upside, Campbell's could have real room to run if the economy turns and shoppers start buying brand names again.
Alex Salkever is Director of Research at Piqqem.com, a stock prediction and analysis community powered by the Wisdom of Crowds.
This means Campbell's should expect pricing power going forward as shoppers who reach for Campbell's are the one's that will pay more Campbell's and its brands because they prefer them strongly to white-label offerings. Over time, that's very good for margins. The company's forward P/E is a paltry 12, which reflects the slowing market but is on the low-end for a highly regarded consumer brand. At a minimum, Campbell's is a warm bowl of soup in a cold economy with strong brand loyalty and pricing power. On the upside, Campbell's could have real room to run if the economy turns and shoppers start buying brand names again.
Alex Salkever is Director of Research at Piqqem.com, a stock prediction and analysis community powered by the Wisdom of Crowds.
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Reader Comments (Page 1 of 1)
3-31-2009 @ 5:05PM
Kate said...
I don't see Campbell Soups as a good buy. At $1.25 plus a can, I'd rather buy Chili or a half dozen other products that offer more for the buck. I used to stock my shelve with soup, but now I only buy what I need for baking. Plus if there is a store brand offered for less, I buy it. I have no idea whey a can of soup is so expensive these days, but there are better food products (more nutritional) to spend your money on then soup.