Consumer stocks are now as risky as they've ever been.
Unemployment's historically high, consumers are spooked, and
subpar earnings abound as companies pay the price for lost
competitive advantage or fiscal irresponsibility. But tough
times can offer investors
the best chance to buy stocks.
Even if stock prices are low, investors still need to be
careful. Many companies simply won't survive the recession in
their current form. However, thinning the herd of weaker
competitors should lead to big winners in the consumer space
when the economy recovers. In this article, I've highlighted
two reasons to love
Campbell (NYSE: CPB), maker of the eponymous
soups, as well as V8, Pace, and Pepperidge Farm brand
products.
Andy Warhol: Investment guru
Although the packaging may have changed from the days
of Warhol's Pop Art paintings, the Campbell soup brand
remains an American icon. Not so sure about that? Just ask
U.S. households, which sip, spoon, and slurp 49 servings of
Campbell's
mmm...
mmmgoodness per year, helping to make it the world's
largest soup manufacturer.
In fact, few foods rank more importantly than soup in the
lunch-and-dinner chow-down, and U.S. consumers have deepened
their brothy love as food costs and economic conditions turn
for the worse. Those trends helped power Campbell's recent
quarterly earnings beat.
Alongside thin-wallet syndrome, consumers tend to fret
over their bulging waistlines, and Campbell's products stand
to benefit here as well. Nourishing changes to existing soups
-- including sodium reductions, leaner meats, and higher
vegetable contents -- should help the company compete with
General Mills ' (NYSE: GIS) Progresso brand
and the private-label soups produced by
TreeHouse (NYSE: THS).
If you're like me, you get nervous when company management
shows signs of complacency. That's not the case at Campbell,
which provides my second reason for heating up a pot of
chicken-noodle love. In its pursuit of various supply chain
efficiencies, the company has benchmarked itself against the
most successful operators in particular areas, including the
diverse likes of
DuPont (NYSE: DD),
Toyota (NYSE: TM),
Procter & Gamble (NYSE: PG), and
Johnson & Johnson (NYSE: JNJ).
Sure, many companies stick to industry-specific
comparisons, but Campbell's willingness to gauge beef barley
against car parts shows some real out-of-the box (or can)
thinking. And if improving operating metrics are any clue,
it's the sort of approach that sets the table for long-term
success.
For all you Foolish Warhol fans, I can't say that Campbell
shares will put Pop of a different variety in your portfolio,
but the company does offer a recipe for consistent
performance. In this environment, that's worth more than 15
minutes of fame.
What do you think?
We've made our Foolish case on Campbell -- now it's
your turn. Do you love Campbell? Loathe it? Share your
comments below.
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This article was originally published as
2 Big Reasons to Love Campbellon
Fool.com
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