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Campbell Soup (CPB - Get Report) boasts the title of being the biggest soup maker in the world, an identifier that may be attracting the wrong kind of attention. After all, to investors, there's nothing sexy about soup. That's left shares trailing the S&P's performance this year and kept a large number of short sellers betting against the stock.
Meanwhile, CPB has been earning commendable margins and paying out a hefty 3.3% dividend to investors betting that Campbell's remains a stalwart brand in consumers' pantries.
To be fair, soup is just the tip of the iceberg for CPB -- Campbell owns food brands such as Pace, Swanson and Pepperidge Farm as well. Those other brands reduce CPB's exposure to a relatively boring food staple, and increase its visibility in more lucrative and exciting parts of the grocery store. That said, there are two big headwinds challenging Campbell and enticing short sellers: rising input costs and flat sales.
Input costs are continuing to grow, particularly in agricultural commodities that are seeing record numbers this summer. At the same time, CPB's sales have effectively flat lined over the last couple of years, not necessarily an ominous sign (the firm still moves close to $8 billion worth of food each year), but not a reason to be a buyer. But sentiment could be turning the corner, especially if international growth helps to offset both headwinds.
Analyst sentiment is on the upswing this week. That makes CPB a Rocket Stock we're betting on for the end of August. To see all of this week's Rocket Stocks in action, check out
the Rocket Stocks portfolio at Stockpickr.
-- Written by Jonas Elmerraji in Baltimore.