Topic: Blue Chip Stocks

CAMPBELL SOUP CO. $63

CAMPBELL SOUP CO. $63 (New York symbol CPB; Conservative Growth Portfolio, Consumer sector; Shares outstanding: 308.7 million; Market cap: $19.4 billion; Price-to-sales ratio: 2.4; Dividend yield: 2.0%; TSINetwork Rating: Above Average; www.campbellsoupcompany. com) is the world’s largest maker of canned soups. Other products include Pepperidge Farm cookies, Prego pasta sauces and V8 vegetable juices. It also sells fresh carrots under the Bolthouse brand.

In July 2015, Campbell paid $231 million for Garden Fresh Gourmet. This firm makes refrigerated salsas, as well as hummus, dips and tortilla chips.

Even with the contribution from this new operation, the company’s sales in the quarter ended May 1, 2016, fell 1.6%, to $1.87 billion from $1.90 billion a year earlier. That’s due to weaker soup demand in the U.S. Weather problems also hurt sales of fresh carrots.

Earnings in the quarter declined 1.5%, to $203 million, or $0.65 a share. A year earlier, it earned $206 million, or $0.66. Campbell now expects to earn between $2.93 and $3.00 a share in the fiscal year ending July 31, 2016. The stock trades at 21.2 times the midpoint of that range. That’s a reasonable multiple in light of the company’s strong brands. As well, recent job cuts and better efficiency should save it $300 million annually by 2018.

Campbell Soup is a buy.

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