ConAgra Foods (CAG)

He bets their frozen food sales are strong because of stay-at-homers, but it yields only 2.4% and is cheaper than peer Pepsico. He's on the sidelines because it lacks longer-term consistency. They report Thursday.

Arguably one of the leaders in the tier 2 brands. Made a huge acquisition in 2012, which hasn’t worked out well. Have had several write-downs since then because of that, and have had to reduce prices to increase sales. As a result, margins have been hammered. Over the last year or so, the stock has done quite well because a private equity firm stepped in. The company has indicated 10% year-over-year EPS growth over the next 3 years. Not a bad time to start some buying, but be careful in the short term. The stock had a considerable run up, and on a valuation basis it is not cheap. As a buyer, take a half position and wait for a pullback.

Thinks they have done all the right things with the acquisitions they have been making and their focus. It is all ceramic strategic assets. Within the food business, there is a secular push towards people wanting to lead healthier lives. If you own, consider taking some profits.

Just made a major acquisition. His issues with this and others in this area are that there is inflation pressure on the cost side. They are not getting a follow through on the pricing side so their margins are being squeezed and he fears for flattish earnings growth. 2.9% dividend yield.