NEW YORK ( TheStreet) -- When even good companies can't escape the market's wrath, investors have begun to look for protection. These days, when cash is not being taken out of the market to put back under the mattress, investors have resort to "playing defense."
To that end, over the past several decades Campbell Soup (CPB - Get Report) has been one of the best defensive plays in the market. Best known for warming up investors' bellies, Campbell also has a long history of decent returns. And this is regardless of whatever adverse conditions the economy may be facing at the time. Accordingly, the track record has afforded Campbell a much-deserved respect.
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Because of Campbell's "comfort foods," shares are not cheap. They very seldom are. But that doesn't mean decent gains aren't around the corner, given all of the skittishness among other sectors. Plus, when I look at, say, a company like Hormel (HRL), whose stock has surged 50% in the trailing twelve months, I realize that the Street is not as price-sensitive for equities as consumers are during food shopping.
What's more, the recent results from Kellogg (K) and Post (POST), there's no question that the packaged food industry has bottomed. And judging from Campbell's price-to-earnings ratio of 32, which is still 10 points higher than Hormel, there are still hearty expectations here. But can Campbell deliver?
The company will report its fiscal second-quarter results on Friday. The Street will be looking for 73 cents in earnings per share on revenue of $2.27 billion, which would represent a year-over-year revenue decline of close to 3%. But after posting a 2% revenue decline in the November quarter, investors already assume that Campbell will beat this number, especially since it included the recent holidays.
Now, although I have complete faith in the company's management, I didn't come away from the last quarter's conference call feeling the sort of confidence I needed to feel from an already-expensive stock. For instance, Denise Morrison, the company's CEO, which I respect greatly, began the call with an apology, expressing disappointment in the first quarter results. I appreciated the honesty and candor.