This Day On The Street
Continue to site
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here

Campbell Soup Tastes Just Right

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.

[Read: Ocwen Shares Look Ripe After Brutal Pullback]

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.

1 of 2

Check Out Our Best Services for Investors

Action Alerts PLUS

Portfolio Manager Jim Cramer and Director of Research Jack Mohr reveal their investment tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
Quant Ratings

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
Stocks Under $10

David Peltier uncovers low dollar stocks with serious upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
14-Days Free
Only $9.95
14-Days Free
Dividend Stock Advisor

David Peltier identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Updates with exact steps to take - BUY, HOLD, SELL
Trifecta Stocks

Every recommendation goes through 3 layers of intense scrutiny—quantitative, fundamental and technical analysis—to maximize profit potential and minimize risk.

Product Features:
  • Model Portfolio
  • Intra Day Trade alerts
  • Access to Quant Ratings
Real Money

More than 30 investing pros with skin in the game give you actionable insight and investment ideas.

Product Features:
  • Access to Jim Cramer's daily blog
  • Intraday commentary and news
  • Real-time trading forums
Only $49.95
14-Days Free
14-Days Free
CPB $61.71 0.36%
AAPL $93.74 -1.15%
FB $118.00 1.10%
GOOG $693.01 0.29%
TSLA $240.76 -2.81%


Chart of I:DJI
DOW 17,773.64 -57.12 -0.32%
S&P 500 2,065.30 -10.51 -0.51%
NASDAQ 4,775.3580 -29.9330 -0.62%

Free Reports

Top Rated Stocks Top Rated Funds Top Rated ETFs