Seeking Alpha: Alliance Grain Traders Still Pulsing With Opportunity

Alliance Grain Traders (OTCPK:AGXXF) (AGT.TO) has done alright since I last discussed the company, with the shares up about 15% over a period where the S&P 500 rose about half that amount and Archer Daniels Midland (ADM) rose about 6%. In that time, Alliance Grain Traders has faced some challenges related to rail logistics, but has also continued to make progress on its food ingredient and retail strategies. While this business is likely to remain a low-margin operation with meaningful year-to-year volatility, the shares don't seem to reflect the potential of the ingredients business.

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Alliance Grain Traders Still Pulsing With Opportunity

Seeking Alpha: McCormick Spanks The Skeptics, But Not Exactly A Bargain

Spice, seasoning, and packaged food giant McCormick (MKC) has long enjoyed a privileged position in the food sector, as investors have been willing to pay a premium for shares in a company that holds uncommonly high market share and ups its dividend like clockwork. The shares were caught in the downdraft that saw other food stocks trailing the S&P 500 after mid-2013, but took an even steeper move down when management handed out weak 2014 guidance at the end of January.

Analysts suddenly started worrying about valuation on stock where valuation really hadn't mattered before, but then first quarter earnings came in higher than expected and sent the shares up more than 5%. McCormick is still expensive, but bulls can build a credible argument that the company's consistent double-digit ROICs and dividend hikes merit a much lower discount rate and that the shares are still a worthwhile holding for long-term investors.

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McCormick Spanks The Skeptics, But Not Exactly A Bargain

Seeking Alpha: For Pinnacle Foods, Slowly Does It

If you're looking for a dynamic revenue growth story, you probably want to look somewhere other than at Pinnacle Foods (PF). Pinnacle's management is realistic, looking for growth in line with the industry categories and focusing instead on optimizing cost and operating leverage. With several other brands and food businesses likely up for sale and opportunities for additional gross margin improvements, Pinnacle Foods still offers some respectable upside for patient investors.

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For Pinnacle Foods, Slowly Does It

Seeking Alpha: Not Exactly Cheap, Post Holdings Still Has Some Appeal

Cheap stocks aren't always (or even necessarily "often") the best performers, and vice versa. I think that's worth remembering when looking at Post Holdings (POST). Whether looking at EV/EBITDA, EV/revenue, ROE/PBV, or a discounted cash flow model, Post just doesn't seem very cheap and the stock has definitely been a strong performer in a sector that has weakened some in recent months.

I won't be surprised, though, if Post continues to stay fairly popular with the Street. Free of Ralcorp (now part of ConAgra (CAG)), Post is emerging from a prolonged period of benign neglect and management has already shown its willingness to leverage the balance sheet to grow and diversify the business. Competition from Kellogg (K), General Mills (GIS), and ConAgra, not to mention private labels, should not be ignored, but I believe that Post is likely to post growth rates on the upper end of the sector range, and I would expect that the Street will show its usual price insensitivity in the pursuit of that growth.

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Not Exactly Cheap, Post Holdings Still Has Some Appeal

Investopedia: Weaker Organic Growth Creating An Opportunity In Nestle

Swiss food giant Nestle (Nasdaq:NSRGY) is a remarkable company in several respects. Despite being one of the largest food companies in the world, Nestle continues to focus on ongoing product innovation and is closing in on generating half of its sales from emerging markets. Add 20 billion-dollar brands and a long track record of out-earning its cost of capital, and it's not too hard to see why Nestle shares often trade at a premium.

“Often” is not the same as always, though, and a recent slowdown in organic sales growth seems to have created a window of opportunity in these shares. Investors have to accept the risk that the company will fail to deliver 5% organic growth for 2013, but the long-term opportunity makes this a name worth considering.

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http://www.investopedia.com/stock-analysis/081213/weaker-organic-growth-creating-opportunity-nestle-nsrgy-krft-gis-ul.aspx

Investopedia: Wall Street All In On Kraft's Improvement Potential

The way many sell-side analysts talk about Kraft Foods (Nasdaq:KRFT) and the company's CEO Tony Vernon, you would think they make sure to never go to bed at night before kissing a picture of them both and writing their names with little hearts substituting for the “o's”. And this is for a company whose organic growth just hasn't been that good since the split with Mondelez (Nasdaq:MDLZ).

Now, to be fair, I do think Kraft is a good business and a very well-run company. In more than a few cases, Kraft either dominates its category or frankly is the category. Moreover, I like the motivational approach the company takes toward incentivizing employees, the company's focus on innovation, and its willingness to shift resources away from brands that can't carry their own luggage. On the other hand, while I do share Wall Street's optimism that Kraft will eventually post margins and free cash flow that are just as good as, if not leading, its peers, the valuation already assumes precisely that.

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http://www.investopedia.com/stock-analysis/080613/wall-street-all-krafts-improvement-potential-krft-gis-nsrgy-sjm.aspx

Investopedia: Kellogg Reports Unimpressive Earnings

While the bull market in consumer stocks has slowed a bit over the past quarter, and Kellogg's (NYSE:K) performance has trailed others like General Mills (NYSE:GIS) and Post (Nasdaq:POST), the stock was still trading quite close to its 52-week high prior to its second quarter report. Unfortunately for shareholders, organic growth came in pretty weak. While the second half should be stronger from a margin perspective, a high valuation and less impressive growth trajectory could put these shares on ice for a couple of quarters.

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Investopedia: McCormick Looks Premium-Priced Even With Premium Performance

I appreciate why McCormick (NYSE:MKC) has almost always carried a premium valuation in the packaged food sector. The company holds effectively two-thirds of the U.S. market for spices, and has multiple opportunities to generate above-average growth in areas like dry dinners and frozen foods, and not just in North America. Even so, there is a fair price for every asset and McCormick's valuation seems well more than “fair” these days.

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http://www.investopedia.com/stock-analysis/062713/mccormick-looks-premiumpriced-even-premium-performance-mkc-gis-cag-yum-pep.aspx

Investopedia: ConAgra Does Appear To Be On A Better Path

It's been easy to criticize ConAgra (NYSE:CAG) management over the years, as relatively ham-fisted management of junior varsity brands has led to pretty pathetic growth and margin performance relative to its peers. What's true about the past is not automatically true about the future, though, and I think ConAgra is in perhaps the best shape it has been in the time I've watched the company. There's still a lot of work to be done in improving margins and cash generation, but in an overvalued sector ConAgra looks like an interesting relative value.

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http://www.investopedia.com/stock-analysis/062713/conagra-does-appear-be-better-path-cag-gis-krft-hrl-hnz.aspx

Investopedia: General Mills Getting Back To Normal

Maybe the markets are getting a bit more rational when it comes to packaged food companies. With many of these stocks up 20% or more over the past year, the last couple of months has seen the momentum fade a bit. Arguably that's a good thing for stocks like General Mills (NYSE:GIS) where the company's self-improvement efforts are likely to be more of the slow-and-steady variety. Although General Mills is back below fair value and arguably a decent long-term hold, it's not likely to deliver another “Market-plus-10%” sort of performance over the next twelve months.

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Investopedia: Smucker Does Alright, But The Street Goes Away Disappointed

I liked J.M. Smucker (NYSE:SJM) on a relative basis back in November, and the stock hasn't disappointed since – trading up about 20% and slightly outperforming peers like General Mills (NYSE:GIS), Kellogg (NYSE:K), and Kraft (Nasdaq:KRFT) in the packaged food space. I still like Smucker as a company – management is happy to run a business of relatively small, focused, market-leading brands, and run them pretty profitably. While guidance of a year-on-year decline in free cash flow (FCF) and stagnant sales may have disappointed the Street, this still remains a relatively interesting name in the food space.

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http://www.investopedia.com/stock-analysis/060713/smucker-does-alright-street-goes-away-disappointed-sjm-hrl-clx-gis-krft.aspx

Investopedia: Hormel Transforming, But Valuation Already Ahead Of It

Within the food and beverage sector there are certain stocks that just never get all that cheap, leaving investors with the uncomfortable choice of paying up (and hoping that the growth expectations come through) or waiting for the rare sell-off. In addition to companies like Nestle (OTC:NSRGY) and Coca-Cola (NYSE:KO), Hormel (NYSE:HRL) deserves a place on that list as the company has long combined good growth, improving margins, and strong returns on capital and delivered good stock market returns (more than tripling the return of the S&P 500 since the early 1990's).

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http://www.investopedia.com/stock-analysis/052313/hormel-transforming-valuation-already-ahead-it-hrl-ul-gis-cag.aspx

Investopedia: Campbell Soup Shows That Shoppers Are More Price-Sensitive Than Investors

This has been a banner year for investors in consumer product companies, particularly staples like packaged foods and beverages. What makes that interesting is that the backdrop hasn't been quite that strong – organic revenue growth has been hard to come by and margin leverage is not exactly plentiful. And yet, despite worries about sustainable growth in the soups business and the weakness in the beverage business, Campbell Soup (NYSE:CPB) has seen its stock outperform the likes of Nestle (OTC:NSRGY), Kellogg (NYSE:K), General Mills (NYSE:GIS), and Coca-Cola (NYSE:KO).

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http://www.investopedia.com/stock-analysis/052113/campbell-soup-shows-shoppers-more-pricesensitive-investors-cpb-gis-flo-g-mdlz.aspx

Investopedia: ConAgra Now Getting Almost Full Benefit Of The Doubt

It's been an interesting few months for packaged food companies. Volume trends have looked softer than expected as consumers continue to feel a pinch, but input costs have also eased up. Most significant, though, was the acquisition of Heinz (NYSE:HNZ) by Berkshire Hathaway (NYSE:BRK-A,BRK-B) and 3G and the near-immediate upward revaluation of the sector.

Against that backdrop, ConAgra (NYSE:CAG) continues to be a “yes, but...” company. As in, “yes, the RalCorp deal helps, but the company has to execute on the integration” or “yes, input costs are lower, but the company is having to spend on marketing/promotion to prop up weak volume”. While I liked ConAgra as an undervalued play in the sector back in December, I don't feel as strongly about it today given the significant move in the sector and this stock in particular.

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Investopedia: General Mills Third Quarter Earnings

When Heinz (NYSE:HNZ) drew a premium-priced buyout bid from 3G Capital and Berkshire Hathaway (NYSE:BRK.A, BRK.B), investors got giddy about revaluing the entire packaged food sector. Unfortunately, that looks a bit indiscriminate when it comes to General Mills (NYSE:GIS). While this isn't a bad business per se, nor is it one where a buyer couldn't find some room for improvement - it doesn't have the same sort of brands, market share or international profile. General Mills' fiscal third quarter earnings weren't bad, but the shares are trading in excess of fair value today and don't look like a great holding at these prices.

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Seeking Alpha: Kraft's Cheese Has Already Been Moved Far Enough

When companies announce major spin-offs or splits, they usually promise that the separation will unlock substantial value for shareholders and allow the two businesses to operate better. While time will tell about that latter part, maybe there was some value created in splitting Mondelez (MDLZ) and Kraft Foods (KRFT). At the current price, Kraft doesn't look like a bargain, nor does Mondelez, as both seem more overvalued apart than they did together. While Kraft Foods has numerous opportunities to improve performance in the coming years, it looks like the Street has already assumed that one way or another those improvements are as good as done.

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Kraft's Cheese Has Already Been Moved Far Enough

Investopedia: Kellog Back In Its Groove

Once a dependable performer in the food category, Kellogg (NYSE:K) has had some challenges and stumbles of late. Management hasn't just tossed around buzzwords and waited in the hopes of things getting better on their own. Instead, the company moved ahead on an aggressive deal in acquiring Pringles and has been actively restructuring the business and investing in brand-building. The Street has already rewarded these efforts to some extent and the shares aren't exactly cheap, but increased confidence and a return to past multiples could offer some further gains from here.

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http://www.investopedia.com/stock-analysis/2013/Kellogg-Back-In-Its-Groove-K-GIS-MDLZ-NSRGY0208.aspx

Investopedia: ConAgra Improving Margins, But Elasticity Is A Challenge

As investors have seen with General Mills (NYSE:GIS) a couple of days ago and now again with ConAgra (NYSE:CAG), the packaged food industry is still facing pretty challenging conditions. In particular, it looks as though companies can raise prices if they want, but they see an almost immediate hit to volumes. At the same time, give credit where it's due - ConAgra has continued to make progress with its margins. With Ralcorp (NYSE:RAH) now coming into the fold, the next year or two could be pretty interesting for ConAgra, even as the retail environment remains challenging.

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http://www.investopedia.com/stock-analysis/2012/ConAgra-Improving-Margins-But-Elasticity-Is-A-Challenge-CAG-GIS-RAH-SJM1221.aspx

Investopedia: General Mills Still A Good News, Bad News Story

I haven't felt all that adamantly positive or negative about General Mills (NYSE:GIS) for a while now. While the company has some definite positives in its favor (a history of innovation and good international growth potential), it is also struggling with weak volumes and share loss in key categories. With the price close to fair value and an uncertain retail strategy in the United States, I'd still just as soon own other stocks in the consumer staples area.

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http://www.investopedia.com/articles/active-trading/12/general-mills-still-a-good-news-bad-news-story.asp

Investopedia: If You're Going To Overpay For A Food Stock, Why Not Heinz?

I tend to believe that Wall Street overvalues the supposed stability of packaged/branded food and beverage companies, which is why investors seldom have the chance to buy the stocks of Coca-Cola (NYSE:KO), PepsiCo (NYSE:PEP) or Kellogg (NYSE:K) at really compelling valuations. Within the broader group of expensive food names, I can see an argument for owning Heinz (NYSE:HNZ) today. Not only is Heinz doing relatively well from an organic growth standpoint, but the combination of strong brands in developed markets and a very good presence in emerging markets is compelling to me.

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http://www.investopedia.com/stock-analysis/2012/If-Youre-Going-To-Overpay-For-A-Food-Stock-Why-Not-Heinz-HNZ-GIS-CPB-UL1122.aspx