David FingoldCampbell Soup CompanyCPBCOMMENTOct 24, 2017

People are moving away from ultra-processed foods with high salt content. Look at the business itself -- go-to products from 1960-70s are getting very tired. Costs up, profits down. FCF actually lower than in 2022. WACC is higher than ROIC, not good.

Not going to go bankrupt, so dividend probably won't get cut. You may be getting a 7% dividend yield as income, but you've watched your stock price drop 40% in the last year. Not for him, but you have to make your own decision on that.

If already owned, could use it for tax-loss selling.

They also sell snacks which was part of the growth story, but the growth story didn't work. He has an exit strategy for stocks, especially top picks. His reduce price was $29 and he sold at a loss. Investors should not keep holding losing stocks and should have an exit strategy. 

He's starting to see some good volume around the price level right now, potential bottoming. Trying to get out of soup. Acquiring some snack companies. Has the potential and the desire to turn around, though that will take a while. Good value right now. Yield is 4.89%.

Doesn't own yet, but plans to buy with proceeds from sale of other US stocks. Start with only a small position today. If it drops below $29, start reducing.

They just reported and today held their investors' call. They say that high prices are scaring away customers with spending starting to slow last January. There was weakenss in crackers and chips. Not helping are the new 50% tariffs on steel and aluminum, precisely what Campbell soup cans are made of. The company blames general economic weakness, but don't mention the GLP-1 drug. The latter makes sense, not general economic weakness. CPB pays a safe 4.5% dividend, but no, it isn't worth getting paid to wait, not with the weight-loss drugs still selling.

It reports Monday. Trades at 11x PE and pays a 4% dividend, but gross margins have been squeezed due to higher costs--from tariffs. Meanwhile, the weight-loss drugs make you feel full, another headwind.

Their product line is very mature and offers little growth. This has been a sideways stock. Their snacks business is doing well, but not a growth driver. Either the stock declines and the dividend rises, or they buy another company.

Will buy Sovos Brands for $2.7 billion all cash. Makes sense, giving Campbell's a growth engine at a time when the stock is out of favour, down 22% YTD. Buy this dip.

Strong performance lately.
Excellent brand name with mature assets.
Defensive name that won't see major growth.