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: Campbell Soup Doesn't Seem To Be Prioritizing The Right Things

It's hard to run too hot or cold on Campbell Soup (NYSE:CPB). It has typically been a pretty conservatively-run company and many of its brands are virtually iconic. That said, management has been making some unusual decisions of late – promotional spend has seemed erratic, the company does not appear to be supporting Pepperidge Farms enough, and acquisitions of organic baby food and retail carrots are head-scratchers. Campbell Soup isn't unusual in being a somewhat expensive-looking packaged food stock, but this isn't a stock I'd pay up to own.

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Investopedia: Hain Celestial's Valuation Already Incorporates Strong Expectations

Even as someone who isn't all that interested in the “healthy lifestyle” trends of today, I find it interesting to see the sort of visceral reactions that stocks like Hain Celestial (Nasdaq:HAIN), White Wave (Nasdaq:WWAV), and Annie's (Nasdaq:BNNY) provoke in investors/readers. In particular, there appears to be a very vocal percentage out there that are just incensed over the valuation and attention these stocks get and absolutely insistent that healthy/organic eating is just a fad.

Whether it's a fad or not (I happen to lean toward “not”, even though I don't participate), there's no question that these stocks have generated some sizable expectations on the Street. As one of the veterans of the sector, Hain Celestial is a good case in point – today's valuation already more than incorporates assumptions that Hain will significantly outgrow the packaged food sector and generate above-average long-term profits. So much so, in fact, that I find it hard to see how the company can live up to (or grow into) these expectations.

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http://www.investopedia.com/stock-analysis/082213/hain-celestials-valuation-already-incorporates-strong-expectations-hain-wwav-krft-k.aspx

Investopedia: With Scale, Flowers Foods Has Built A New Future For Itself

Tech investors may turn their noses up at consumer staples companies as hopelessly low-growth and boring, but Flowers Foods (NYSE:FLO) is a good example of what a prudently aggressive management team can accomplish. In 2000, the company served about one-third of the country; now that figure is up over 75% and the company has yet to focus on the Midwest and Pacific Northwest regions.

Along the way, Flowers blend of organic and acquired growth, scale, and operating leverage has produced nearly 9% compound revenue growth and almost 15% free cash flow growth. That, in turn, has fueled one-year, five-year, and 10-year stock appreciation of almost 70%, 100%, and 500%. While I'm not calling for an end to Flowers gaining share or growing its business, I do wonder if the shares aren't in need of a little rest, as the valuation no longer seems quite so compelling at these levels.

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http://www.investopedia.com/stock-analysis/081413/scale-flowers-foods-has-built-new-future-itself-flo-cpb-k-mdlz.aspx

Investopedia: Can Mondelez Live Up To The Sell-Side Hype

Not unlike the apparent love affair between Wall Street and Kraft (Nasdaq:KRFT), Mondelez (Nasdaq:MDLZ) gets quite a bit of love from the sell-side. Many analysts seem convinced that Mondelez can significantly boost its organic growth over a relatively short time and likewise significantly upgrade margins. While I think Mondelez is basically a good company, I worry that the expectations bar is being set at a level where a failure to perform is going to create a real backlash. Even if I use growth expectations beyond the published estimates of the bulls, I can't really get to a point where Mondelez looks cheap today.

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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: 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: Annie's Still A High Growth-High Multiple Proposition

The hot packaged food market has cooled a bit recently, but Annie's (NYSE:BNNY) continues to sport a rich multiple as a relatively rare high-quality play on consumer demand for natural and organic food. Annie's isn't just a healthy living play, though, as the company is still relatively young and can look forward to years of product introductions and further distribution leverage. I recognize that growth investors tend to emphasize opportunities more than multiples, but more value-conscious investors may not find Annie's so appealing today.

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Investopedia: Diamond Foods Making Better Moves, But Large Uncertainties Remain

Diamond Foods (Nasdaq:DMND) is trying to get back on solid footing after a series of self-inflicted wounds threatened the survival (or at least the independence) of the company not so long ago. While rehashing the company's accounting issues and strategic missteps is beyond the scope of this article, the fact remains that Diamond Foods is still in the middle of its clean-up operations. Valuing these shares is tricky given all the factors at work, but they do appear undervalued provided that the company can continue to repair its margins and clean up its capital structure.

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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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Investopedia: Mondelez Isn't As Good As Nestle, But Priced Like It Is

While I realize that Wall Street typically prices stocks on the basis of what investors believe a company will look like in the future, I'm still surprised by the relative valuations that come out of the process. Take the case of Mondelez (Nasdaq:MDLZ). This company is focused on multiple growth areas in the packaged food space (and has a large developing market exposure) and does indeed post better growth than many of its peers, but the overall combination of growth and margins wouldn't normally seem to argue for valuation on par with Kellogg (NYSE:K) or Nestle (Nasdaq:NSRGY). Consequently, although I do expect Mondelez to do well relative to its sector in terms of reported growth, I continue to believe that valuation is already too steep.

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http://www.investopedia.com/stock-analysis/050813/mondelez-isnt-good-nestle-priced-it-mdlz-k-nsrgy-pep-krft.aspx

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: PepsiCo Looks Like A Relative Value In Its Sector

Investors have certainly been willing to pay more for the relatively predictable streams of earnings from packaged food companies recently, and that has left scant value in the sector. That PepsiCo (PEP) still seems to have some value in it is likely a product of the fact that not all analysts are completely sold on the idea that the benefits of the company's recent restructuring will last over the long term. While wasteful acquisitions and unsuccessful marketing initiatives may loom as ongoing threats, these shares do seem to over some relative value in the sector today.

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PepsiCo Looks Like A Relative Value In Its Sector

Seeking Alpha: Mondelez's Sugary Valuation Could Cause Wealth Decay

I can understand why investors like Mondelez (MDLZ). The company is not only #1 or #2 in most of its products and markets, but it has been deliberately assembled to address faster-growing markets in the larger packaged food industry. On top of that, this company has some of the highest exposure to emerging markets in the sector. Yet for all of those positives, I do think investors should be careful about what they pay, as expectations for this company are already pretty significant.

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Mondelez's Sugary Valuation Could Cause Wealth Decay

Investopedia: Annie's Surfing A Rising Tide In Food

Annie's (NYSE:BNNY) looks like one of those companies that is destined to be controversial and frustrating for the skeptics. The company's business model is predicated on selling premium-priced packaged foods to customers who believe it's somehow better for them, and while skeptics will almost certainly question how sustainable that model is, plenty of companies have prospered for years by selling people on the notion that there is value in paying up for their particular products.

In the meantime, the more pressing financial questions revolve around the company's ability to successfully introduce new products and drive better margins while they do. Not surprisingly, the stock is no particular bargain today, but growth investors are not likely to abandon it for that particular reason.

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Seeking Alpha: Heinz May Be A Buffett Stock, But This Isn't A Buffett Price

I was not surprised to see that Warren Buffett chose to use Berkshire Hathaway's (BRK.A) considerable cash hoard to acquire another high-quality consumer brand that sees shoppers buy the same products over and over across decades. Insofar as brand quality, return on capital, and high-return growth potential, H.J. Heinz (HNZ) is a Buffett stock through and through. That said, the price that Buffett was willing to pay is pretty shocking to me.

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Heinz May Be A Buffett Stock, But This Isn't A Buffett Price

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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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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Investopedia: Unlike Twinkies, Hostess Proves Very Perishable

For many companies, bankruptcy is an opportunity to gain some breathing space, refinance debt and move on. Most airlines have been through bankruptcy at least once, and many other companies in operation today once had to seek protection from their creditors. It's not often that major companies choose the route of liquidation, but on Thursday, Hostess, the maker of well-known baked goods like Wonder Bread and Twinkies, announced that it was doing precisely that.

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