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Two Ways: Campbell's Says, "No Soup Discounts For You!"


Strengthen your portfolio in good times and bad.


The US consumer, battered by high energy prices in 2008 and a bleak employment picture throughout 2009, isn't likely to see relief from rising food prices. At least not from Campbell Soup (CPB). According to Reuters, there simply isn't a need to do so.

Campbell CEO Douglas Conant said, "Sales are growing, our marketplace presence is growing, consumer purchases are actually growing faster than sales… Clearly we're having a good year, we've had the best year in soup that I've experienced in my 9 years here… So we're not going to be reducing prices in the near term."

The only way the company would consider cutting prices is if commodities fell while margins improved. Campbell hedged some of its costs last year for grains and other ingredients when prices were near all-time highs. Those hedges expire in July. "If our margins start to turn around," Conant said, "then we'll reconsider that, but that's premature to talk about."

For more, see Satyajit Das' No Food For Oil: The Commodity Outlook.

From the Bull Pen: Professor Ryan Krueger and Professor Kevin Depew have talked about the earnings abilities from consumer staples companies for quite some time now.
Those bullish Campbell can set a sell stop below recent lows (near $25.50).

From the Bear Cave: Bears looking for a downside play can keep an eye on Harley Davidson (HOG). Entry can be near the 50 DMA ($11.40), but also recognize major resistance near $15.

Have a great night, Minyans! See you for Turnaround Tuesday!

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No positions in stocks mentioned.

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