Under the Radar: Smucker Offers Sweet Deal

"Under-the-Radar Stocks" is a daily feature that uncovers little-known companies worthy of investors' consideration. Check in at 5 every morning to find out about stocks that tend to beat their bigger brethren.

American icon John Chapman, a.k.a. "Johnny Appleseed," meandered around Ohio in the early 1800s, sowing apple seeds and starting nurseries. Not long after, Jerome Monroe Smucker opened a cider mill in Orrville, Ohio, capitalizing on the fruits of Chapman's labor.

From cider came apple butter and from apple butter came jams and jellies. Today, Smucker's family business leads the market in fruit spreads, ice cream toppings and natural peanut butter. But the company, J.M. Smucker(SJM Quote), has stayed true to its roots, keeping its headquarters at 1 Strawberry Lane in Orrville.

If the U.S. economic outlook dims, investors will turn to consumer-staples companies -- the makers of products that are always in demand. As the market rallies, it might be wise to add these defensive stocks to your portfolio in case the collective mood sours. Among the companies you should consider is Smucker, a mid-cap stock with brand power and a strong financial position.

Smucker shares, which we rate "buy," have delivered consistent gains. They have climbed 36% in the past year even as the S&P Consumer Staples Index lost 9.2%. The stock has jumped 30% annually, on average, in each of the past three years, outperforming the average 5.9% increase of the industry.

Net income at Smucker more than doubled in the fiscal fourth quarter to $94 million. Revenue climbed 81% to $1.06 billion. Earnings per share were up more modestly, by 19% to 80 cents.

Despite its impressive quarterly performance and financial position, Smucker shares are affordable. With a price-to-earnings ratio of 15, the stock is 10% cheaper than those of the average packaged-food and meat company, and offers a dividend yield of 2.86%.