Likewise, I expect that bears will continue to press the issue regarding the company's margins without fully appreciating the disruption that large deals like Ralcorp are known to cause. But I believe the risk/reward is heavily tilted to the positive side. Although gross margin was flat along with a slight decline in operating margin, I would take that given that Ralcorp contributed to $962 billion in revenue.

It seems as if management is willing to sacrifice near-term margin for long-term growth. It's not a novel idea, but it's proven very effective. Other packaged food giants including Kraft ( KRFT) and Nestle ( NSRGY) have gone through this same process. I've said it before and it's worth repeating -- with Ralcorp now secured, investors should expect a leaner and more valuable company in the long term.

I expect that management will figure out ways to remove costs associated with Ralcorp while improving asset utilization. But it's not going to happen overnight. When it does, margins will follow. In the meantime, I don't believe ConAgra should be criticized for any growth it is able to produce, whether organic or through acquisitions.

I don't believe it makes a difference in the grander sense unless you're scrutinizing an individual asset. With the continued fundamental improvements that I've detailed above, I remain a long-term bull on this company. The stock has traded relatively flat since I recommended it last quarter and until I see a meaningful drop in performance I have no reason to change my view.

At the time of publication, the author held no position in any of the stocks mentioned.

This article was written by an independent contributor, separate from TheStreet's regular news coverage.
Richard Saintvilus is a private investor with an information technology and engineering background and the founder and producer of the investor Web site Saint's Sense. He has been investing and trading for over 15 years. He employs conservative strategies in assessing equities and appraising value while minimizing downside risk. His decisions are based in part on management, growth prospects, return on equity and price-to-earnings as well as macroeconomic factors. He is an investor who seeks opportunities whether on the long or short side and believes in changing positions as information changes.

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