Campbell Soup Looks Mmm Mmm Good
Canned soup is a good way to go as the weather and the markets turn.
Asian stocks ended lower. Then Hang Seng and the Nikkei were off 0.86% and 1.32% respectively. European stocks were trading lower early this morning too. And here in the US we're currently trading lower.
Here's what I'm focused on this morning:
Campbell Soup (CPB):
It turns out Campbell Soup is planning on whipping out the wallet. In case you missed it, the soup company made a bunch of headlines yesterday, saying it plans to goose its dividend 10%.
Some quick thoughts:
1. I know I sound like a broken 45 (anybody still have those?) because almost every time a board okays a dividend increase, I chime in with pretty much the same comment: Boards of directors (at least smart ones) don't generally do things like gas dividends unless they're optimistic that their company will be able enough to do so. But I think it's true. Also, gassing up the dividend shows that shareholders are a good-size priority, which is nice too.
2. Soup has other advantages as I see it. In cold weather, folks love to kick back with a hot cup, and it's cheap compared to a lot of other pre-prepared foods, which should appeal to a good number of shoppers these days.
3. Long story short, I see some possible upside here and think the stock should trade in the high $30s or possibly the low $40s.
BJ's Wholesale Club (BJ):
Given how full I've seen the parking lot at my local BJ's over the last few weeks you'd think they were giving something away. Here's the scoop on the company's third-quarter numbers.
Excluding items, it put up $0.45, which was smack dab in line with expectations. And for the fourth quarter, it indicated that it was looking to put up $0.96 to $1. From what I'm seeing, analysts are looking for $0.97.
1. It was an okay quarter and the outlook was okay, and it's trading at about 14.1 times this year's estimate, which is okay. You see what I'm getting at?
2. I have no real bones to pick with either the earnings report or the story. But at the end of the day I'd like a little more to grasp on to -- a real down and dirty reason to want to grab this bull by its horns.
3. At present, I'm just not feeling that warmth or love. I'm also a little concerned that the competitive environment during the holiday season could really put the pinch on the margins.
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