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Campbells Soup is a stale old company with stale old products and stagnant growth potential. They overpaid badly to acquire Synders Lance in a desperate attempt to branch out into the snack business - deworsifying, in the words of Peter Lynch. They've dropped 40% for a reason, and there's no reason to think it's going back to it's highs any time soon. Perhaps they will eventually get sold, Berkshire and/or 3G look like logical candidates, or perhaps another food company, maybe GIS? I don't know, but given the current situation, I would NOT consider them undervalued. I'd stay away, there's better places to put your money.
Take a look at UNFI in the food space. They just announced record quarterly earnings and are still reasonably valued. That's one that I'm watching closely.
The trick is to get in before Buffett, but even getting in after Buffett will likely create a probably price floor. Just look at what happened to AAPL as Berkshire entered and later bought some 75M shares this last quarter. Since he's a value guy and Apple has announced a $100B future stock buyback, you can bet the share price will not drop below $165 barring anything catastrophic.
You don't have the same assurances with Campbells. Unless they break into a profitable food trend, I would stay away. The stock is cheap on a historical PEG ratio, but the stock has got no mojo.
Buffet buys food companies with good products where there is high demand for the product. Campbells soup has deteriorated in quality to the point that lifelong customers aren't buying any more. Maybe it could be turned around, but it is difficult to regain customers that you have driven away by cheapening the product while raising prices.
Buffet buys food companies with good products where there is high demand for the product. Campbells soup has deteriorated in quality to the point that lifelong customers aren't buying any more. Maybe it could be turned around, but it is difficult to regain customers that you have driven away by cheapening the product while raising prices.
Amen to that. Smaller sizes, cheapened products and higher prices is what has done in the entire packaged food industry. All the big names are hurting right now. Given the problems that Kraft Heinz is having, why would Buffett want to buy another packaged food company. Again, take a look at UNFI if you want a food company with growth and/or takeover potential.
It is more of a trade than an investment. The stock is deeply oversold compared to its 200-day moving aver. I think their biggest problem has been the country's demographics have changed and continue to shift away from the traditional American culture. There are more people of foreign background that buy ingredients for their native cuisine. These people also seem to buy more produce and meat to cook their meals rather than rely on prepackaged products.
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