This is a company I have done covered call in the past, primarily for mid-teen to high teen annualized returns. The sales, earnings are pretty steady, doesn’t move much up or down.
The company has changed its name and removed the soup from its name, to reflect they are no longer a soup company but a meals and beverages and a snack company. The array of brands they own is impressive.
Interestingly, the company doesn’t import much and has a modest export to Canada. There are other company specific headwinds, but the stock price has declined 30% from 52.81 and is hitting the first support level and $32.5 is a 10 year support. Current dividend is $1.56 annualized and at $30 the dividend yield will be 5.2%. At today’s price if you do a covered call you can get 10.85% annualized return.
I might wait to see where the bottom settles in to do that, and we may get a mid-teens return opportunity.
These are not going to make you rich, but provide some steady return to your portfolio. I thrown in these covered call’s to balance growth.
Campbells is traditionally located in Camden, NJ. Their watertower across the Delaware River from Philadelphia is painted as a Campbells soup can.
NJ, The Garden State, has ideal conditions for tomatoes. No wonder a soup company is located there. The Rutgers tomato is famous.
John Dorance is the inventor of condensed soups. They are mostly made in Dorance, OH. Now most tomatoes are grown in California, processed to tomato paste and shipped for processing to soup.
I would wonder if they have moved operations to Mexico for lower labor costs and if they will be impacted by tariffs.
Their endless ideas to grow profits have mostly been not very successful. Lots of disappointment to investors. A low margin, extremely competitive business. They dominate the soup aisle in the grocery store. Prego and Pepperidge Farms Goldfish crackers are pluses but competition is intense.
HJ Heinz used to be the main competitor out of Pittsburgh, but now its Kraft Heinz with Warren Buffett as a major investor.
I could be wrong, but they don’t have much exposure to Mexico.
It is their achilles heel. Soup as a category is not going anywhere, if not steadily declining. The company’s’ future is with snacks, canned food, pasta sauce, etc. Separately don’t underestimate their Rao’s (pasta sauce), Kettle (chips) brands. The collection of brands is impressive.
They have 30%+ gross margin and 12% ~ 14% operating margin. Unlike technology, they cannot be dislodged overnight. They have $9 B in debt and their interest cost has doubled from Oct-23 quarter. They also have a steady marketing and advertising expense. They can squeeze some to meet their numbers, but long-term it will hurt them.
If it gets to $30, I would be a buyer for the long-term. Where any sign of growth will immediately push the stock to mid 40’s to 50. T
Especially with prices being as they are I know people who bring canned soup for lunch and eat it at their desk. With people returning to work those numbers should be improving.
I have always objected to $3 for a can of soup. I can get a can of veggies from Aldi for $0.63. Add some broth and its soup. So $1 seems reasonable for canned soup. And Con Agra does that with their Healthy Choice brand when on sale.
I think Campbells keeps the price of their soup in the soup aisle high to keep from cannibalizing their condensed soup lines which are their traditional product. Read the label and condensed soup turns out to be mostly cornstarch thickener in broth made from boullion cubes. Not much to it. Can and label cost more than the product.
The stock is on steady downtrend, and the business is not doing great either. They are having challenges in their snack segments and are facing tariff headwinds. For now, I am going to wait to see where the stock hits bottom or at least moves sideways.
Assuming they can maintain their dividend, that will be $1.56, and at current price dividend yield is 5%, and at $25 it will be 6.25, that will be more than 50% decline from the high’s of $52.8.
OK. I was looking at why many consumer stables are actually down… and the reason is…
The economic uncertainty of this year is forcing Americans to munch less. That’s bad news for shares of consumer staples which make everything from cookies to cereal to pasta.
Looks like July 10 is the bottom and the stock moved up a bit and moving sideways. Earnings are scheduled for Sep 3rd. The channel check by MS, indicates the sales are down 2.5%, Volume is down by 5.6%, the stock barely reacted. May be all this is priced.
I will wait for the earnings call, but I am not sure there are going to be any catalyst that will make me to run and buy, even though the stock is down from $52…
May be Berkshire uses the proceeds from KHC to buy CPB… just to be clear, this is a joke.
Meanwhile Kraft-Heinz’s is about to split and Berkshire Hathaway threatens to sell its shares. Processed foods are out of style. Consumer preferences are changing.
Can old line food processors survive and prosper? How do you invest in natural foods? Produce, meat, poultry, dairy seem very competitive. Certainly not growth businesses. Kroger? Amazon? Walmart? Target?
@pauleckler- Has cooled off a lot since July 2025, but an entity that is somewhat popular in my home city, and in the Bay Area is Sprouts Family Market (SFM). Aisles are full of natural or organic products, some of their produce is organic and they have an active deli and sushi counter. Hmm! Given their 6-month plunge – SFM might be a good candidate for my watchlist and a future starter position
And Amazon has announced plans to build more Whole Foods. But they have been slow about it. Goes only to up scale communities.
Our local grocery chain Schnucks tried to do a Whole Foods equivalent in Chesterfield Valley, an upscale community. It lasted abt a year. One in Ellisville lasted abt a year. Fresh Tyme survives here but you drive for miles. Only some are willing to pay the price for fresh good quality produce. Aldi does much better at it in volume.
I did not realize how diversified Trader Joe’s is - AI search says over 40 States have a Trader Joe’s. CA has a lot of Trader Joe’s - over 200 out of a Total of close to 600. I guess, from an affluence perspective, a lot of the nicer neighborhoods tend to have a Trader Joe’s in those ‘hoods. Or nearby.
Never, never buy a company because price has come down. Having said that…
$CPB declared dividend yesterday, $0.39, and current dividend yield is 7.6%+. Consumer discretionary sector is not doing great and $CPB is probably the worst company in the sector. It is one of those rare company that has more than 4 analysts slapped sell rating.
CPB. We lower our target -$2 to $18 on 9.5x our CY27e EPS. This is a half turn beneath current NTM P/E. We see the greatest downside to CPB earnings amongst our entire coverage, and are -18% below Street for FY27. This, along with high leverage and an elevated dividend, justify this haircut to current trading levels.
Last Q earnings $CPB cut the guidance and guided to invest more in price cuts… the competition is heavy and they have to bring prices down to keep the sales down low singe digit.
All the consumer food companies seem to be experiencing a triple whammy. Kraft Heinz, Kellogg, General Mills.
The aversion to processed foods. Glp-1 diet drugs. Inflation. The money squeeze from the low leg of the K recovery.
No doubt these companies, their very strong brands, and excellence in marketing will result in recovery one day. But it will take a long time. Recovery requires end of war and falling oil prices at least. Not this year. Falling interest rates would help. Not this year.
We have been saying the same for Dollar General and Dollartree.
Takes lots of patience. And you are likely to get lots more buying opportunities before recovery arrives. I watch these stocks but think other opportunities give better returns for now.
I like Colgate better than Clorox. Clorox has lots of competition and not much international sales. Neither has much growth potential. Need to invent new category to grow. Otherwise all about raising prices and cost cutting.
