Growing Markets Hungry For Campbell Soup?
The Chinese consume 320 bln servings of soup annually, 306 bln more than Americans.
"Who are you, Jacques Cousteau?"
I guarantee there a lot of people out there scratching their heads after those two lines - however I am confident that the ardent Odd Couple fans out there have grins from ear to ear as they fondly remember the "Let's Make A Deal" show that originally aired on February 23, 1973 - Season 3, Episode 20, for those keeping score. To this day, if I am up late channel surfing and I come across an Odd Couple episode I will immediately put the remote down and see how quickly I can figure out exactly what episode it is: generally, doesn't take all that long either.
So, what is the point of this, you ask? Well, part of the appeal of Let's Make A Deal was Monty Hall asking some over-caffeinated audience member dressed as The Lone Ranger or Gumby if they were carrying a box of raisins, an Indian Head nickel or a can of Campbell's Soup.
It was always fun to watch them rifle through their handbags or pockets in search of their Holy Grail for television immortality as Monty stood by, waiting patiently.
How many folks out there realize that the Campbell Soup Company (CPB) is a publicly traded company? How many of you know that it is due to report its 4Q earnings before the open on September 6? Why is this relevant?
Believe it or not, Campbell is a growth company. After you stop laughing, consider this: Campbell is expanding into Russia and China. In Russia specifically, although it is a couple of years away from profitability, 32 bln servings of soup are consumed annually, compared to 14 bln in the United States. In terms of China, Campbell Soup has sold its Swanson brand in Hong Kong for 20 years and has about a 90% market share. For some perspective, Chinese soup consumption is about 320 bln servings per year.
Today in the FT Deutschland it was reported that Lindt & Spruengli was interested in Campbell's Godiva. Recall back on August 9, Campbell hired Centerview Partners as its financial advisor to help consider strategic alternatives for Godiva.
And before you discount trade Campbell as an earnings play, consider this: in the last nine quarters, Campbell's earnings have come in ahead of Wall Street estimates. Now it has been tough sledding in the stock for much of this year after making a 52-week high back in February of $42.65. But it looks as though it may have bottomed out back on August 9 as the stock made a 52-week low on about three times normal volume.
I think Campbell is worth a look as in the current volatile times, these tend to be the names that are overlooked and therefore carry with them the greatest potential upside. And think about it - with the baseball playoffs a few weeks away and fall in the air, what is better than a nice blanket and a cup of hot soup?
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