J.M. Smucker Still Looks Appetizing

These are interesting times for consumer staples companies, as high prices have been hitting consumers hard and leading to trading-down (or reducing consumption), but the alternative of just absorbing the hit to margins is hardly better. J.M. Smucker (NYSE:SJM) (“Smucker”) has navigated this better than many, leading to above-average performance over the last year relative to other packaged foods companies, but sticking the landing and ratcheting back pricing when (hopefully “when” and not “if”) cost inflation subsides will be an important test for management, as will capital allocation in the coming years.

Valuation is often tricky with stocks with Smucker, especially in periods of weak market sentiment, as investors will often bid them up on the expectation of their acyclicality and more durable earnings. Up close to 20% over the past year, I can still see upside into the high-$150s for Smucker, but I’d rather wait for a sale before making a large commitment to the shares.

 

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J.M. Smucker Still Looks Appetizing