J.M. Smucker spreads around its profits

The rest of Smucker's business operations demonstrate the inherent strength of this leading food company: peanut butter (19% of revenue), shortening and oils (14%), fruit spreads (13%), baking mixes and frostings (10%), canned milk (10%), flour and baking ingredients (8%), portion control (5%), juices and beverages (5%), frozen sandwiches (5%), toppings and syrups (4%), pickles and condiments (3%), and other products (4%). Many of the above have well-established brands and market positions.

Further, lower commodity and ingredient costs should provide a modest tailwind in FY2009. The First Call FY2009/FY2010 EPS estimates for SJM are $3.22 to $3.36 [Note: the aforementioned FY2009 EPS estimate includes a 6 cent charge for enhanced peanut butter safety, even though no Smucker products were part of the recent recalls].

Stock Analysis: J.M. Smucker is a moderate-risk stock. Consider buying a 25% position in SJM now; then buy another 25% in three months, if U.S. economic conditions don't worsen substantially. Under any circumstance, don't buy more than 50% of your SJM position in the first half of 2009. Sell/Stop Loss if you were to buy shares in this company: $22.

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Disclosure: Lazzaro has no positions in stocks, but does own shares in two Pimco Bond Funds: PHDAX and PYMAX.