NEW YORK (TheStreet) -- Weak sales of its Folgers coffee brand haven't been enough to keep profit-hungry investors from pouring money into fruit-spread specialist J.M. Smucker (SJM). Smucker, headquartered in Orrville, Ohio, has offset its weak java business by growing sales in other brands like Jif peanut butter, Crisco oils, and, of course, its fruit spreads.
Combined with better pricing, which is helping to stabilize its profit margins, Smucker now looks revived. And despite the stock's already strong performance, up better than 17% in 2015, Smucker investors can expect more gains in the months and quarters ahead. So it makes sense to buy shares now, ahead of the company's fourth-quarter and full-year earnings results due out Thursday before the opening bell.
For one thing, despite the weak sales volumes and lower margins that have impacted the entire packaged food space, the sector is on the rebound, gaining almost 7% on the year, and more than 16% in the past twelve months. Not to mention, with much of the negativity regarding downbeat consumer spending already priced in, it's likely investors have seen the worst within the sector.
This certainly appears to be the case with Smucker stock. Consider: Though the shares are up 17% on the year, the lion's share of those gains (15 percentage points) have come in the past six months. Yet even with all of the money that has poured into the company, SJM currently trades at just 21 times earnings, in line with the S&P 500. Given that P/E ratio, it's tough to suggest that SJM is undervalued. At worst, though, we can agree SJM is fairly valued. But that doesn't mean there's not a potential upside for investors.