The following commentary comes from an independent investor or market observer as part of TheStreet's guest contributor program, which is separate from the company's news coverage. The opinions expressed are those of the author and do not represent the views of TheStreet or its management.
By Ian Wyatt
NEW YORK (TheStreet ) -- During its five years of existence, this company's stock has risen 148%, while the iShares Dow Jones U.S. Consumer Goods Sector Index Fund (IYK), of which it is a member, has risen just 6.3%.
That outperformance, from a typically slow growth sector, is worth taking a closer look at.You're more than likely familiar with this company's products, if not its name. The company is TreeHouse Foods (THS). Last year, TreeHouse saw its share price rise 32%. In 2009, TreeHouse Food's stock returned investors a healthy 43%. Based in Illinois, TreeHouse Foods says that in the United States it sells more than half of the non-dairy coffee creamer (Cremora and private labels), a third of the pickle products, and nearly one-quarter of all salad dressings -- not to mention one-fifth of all canned soups. It also believes that it's both the U.S.'s and Canada's largest producer of private label salad dressings, drink mixes, and instant hot cereals.
These aren't exactly exciting products, but we don't look to consumer staples stocks for excitement. We look to them for consistent gains, and 75% over two years is pretty darn good. While shopping for groceries most people seek out the best value without sacrificing quality. During the recession, many Americans turned to the store brands offered at Kroger (KR), Wal-Mart (WMT) and Safeway (SWY), as a cost-saving alternative to the national names. This was a boom for TreeHouse, since it provides private label products to retailers to resell under their own brand names. Many shoppers are still skipping past better known offerings from Kraft Foods (KFT), Campbell Soup Co. (CPB) or Ralcorp Holdings (RAH), to give the house brands a try and often they've found them to their liking, especially from the savings aspect. TreeHouse Foods, with a market cap of $1.82 billion (2010 net sales were about the same), has been running with the big boys. Its largest customer is Wal-Mart Stores, accounting for 18.5% of its annual sales in 2010. The company was created in 2005, as a spin-off by dairy giant Dean Foods (DF) to shareholders of its specialty foods business.
Select the service that is right for you!COMPARE ALL SERVICES
Jim Cramer and Stephanie Link actively manage a real portfolio and reveal their money management tactics while giving advanced notice before every trade.
- $2.5+ million portfolio
- Large-cap and dividend focus
- Intraday trade alerts from Cramer
- Weekly roundups
Access the tool that DOMINATES the Russell 2000 and the S&P 500.
- Buy, hold, or sell recommendations for over 4,300 stocks
- Unlimited research reports on your favorite stocks
- A custom stock screener
- Upgrade/downgrade alerts
Jim Cramer's protege, David Peltier, identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.
- Diversified model portfolio of dividend stocks
- Alerts when market news affect the portfolio
- Bi-weekly updates with exact steps to take - BUY, HOLD, SELL
All of Real Money, plus 15 more of Wall Street's sharpest minds delivering actionable trading ideas, a comprehensive look at the market, and fundamental and technical analysis.
- Real Money + Doug Kass Plus 15 more Wall Street Pros
- Intraday commentary & news
- Ultra-actionable trading ideas
Our options trading pros provide daily market commentary and over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.
- 100+ monthly options trading ideas
- Actionable options commentary & news
- Real-time trading community
- Options TV