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: 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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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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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: 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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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: PepsiCo Has Caught Up, Now It Needs To Outperform

Even though PepsiCo (NYSE:PEP) is routinely lashed for not being Coca-Cola (NYSE:KO), I wrote earlier in this year that I thought the stock's relative undervaluation to the increasingly overvalued packaged food sector seemed out of line. Since then, PepsiCo has closed the gap with the likes of Coca-Cola, Mondelez (Nasdaq:MDLZ), and Kellogg (NYSE:K) as the shares have underperformed the S&P 500 by a smaller amount.

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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: Better Margins Are Nice, But Are Green Mountain Investors Too Excited About The Starbucks Deal?

For better or worse, Green Mountain Coffee Roasters (Nasdaq:GMCR) is never a boring stock to watch. Caught in a tug-of-war between bulls and bears (the stock is up more than 100% over the past year, but over one third of the float is shorted), earnings reports always get more than their fair share of attention. This time around, the company made some respectable progress on margins, but investors may be getting a little too excited about the long-term implications of a new Starbucks (Nasdaq:SBUX) deal and a little too casual about unimpressive revenue growth trends.

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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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Investopedia: Starbucks' Special Model Is Valuable, But Maybe Not This Valuable

Normally talking about “liquid meals” is something reserved for college students, but the reality is that Starbucks (Nasdaq:SBUX) has long since proven that there's room in the quick service restaurant (QSR) for something other than burgers and sandwiches. Starbucks has likewise capitalized on the brand value it built through its stores by establishing a significant retail/commercial presence that few restaurants come close to matching.

I don't want to make the mistake of underestimating what Starbucks can become. There's still ample room for store expansion in much of the world, not to mention additional products in the retail channel and follow-on markets like teas and pastries.

The only question I have is what this is all worth. On one hand, Starbucks doesn't seem priced all that out of line with successful QSR operators like McDonald's (NYSE:MCD), Chipotle (NYSE:CMG), or Dunkin' (Nasdaq:DNKN), nor successful packaged food and beverage companies like Coca-Cola (NYSE:KO), Mondelez (Nasdaq:MDLZ), and Nestle (OTC:NSRGY). On the other hand, investors have to either expect strong high-teens free cash flow (FCF) growth for at least another decade or accept relatively unimpressive expected annual returns for today's valuation to make a lot of sense.

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Investopedia: Investors Can't Seem To Get Enough Of Hershey

I have to give credit where it's due – Hershey (NYSE:HSY) is definitely one of the strongest stories in packaged/branded food today. While there are a few relative newcomers showing better volume growth (from a much smaller base), Hershey continues to lead the way when it comes to the large U.S. companies. Better still, Hershey is mixing that growth with strong margin leverage and making a pretty pleasing combo. Although I still think these shares carry a premium valuation, it's hard to argue with a story where management is making so many of the right moves.

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Investopedia: McCormick Continues To Defy Gravity

When I last wrote on McCormick (NYSE:MKC) in October of 2012, I liked almost everything about the company except the valuation on the stock. However, as I've mentioned repeatedly in the past, valuation is no impediment to further appreciation in the short term and McCormick shares have climbed a further 15% from that point (beating the market by more than 7% over that time).

Accordingly, the story on McCormick largely remains the same. While some investors will argue that the valuation of Berkshire Hathaway's (NYSE:BRK.A) and 3G Capital's deal for Heinz (NYSE:HNZ) “proves” that packaged food stocks are undervalued, I don't share that sentiment. The strong volume growth at McCormick is certainly positive, and I like both the company's commanding U.S. share and growth prospects, but today's share price suggests future appreciation potential more suited to bonds than an equity.

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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

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: Nestle A Little Light On Results, Heavy On Valuation

Nestle (OTC:NSRGY) has trained investors and analysts to expect a high level of performance, so although the company had one of the best financial reports of the food sector in the fourth quarter, the overall reaction hasn't been too positive. While Nestle is absolutely one of the best-positioned companies for emerging market growth and one of the best-run companies in the world, today's valuation doesn't offer all that much upside.

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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: Investors Still Highly Prize Hershey's Consistent Growth

Hershey (NYSE:HSY) may not be a sure thing strictly speaking, but there aren't many companies out there with its history of consistent revenue and dividend growth. International growth is still a valid talking point, as is valuation, but Hershey looks like one of the better volume growth stories in the food sector right now.

Fourth Quarter Results Fueled by Volume and Ads
Hershey had an interesting fourth quarter from a financial perspective. Revenue rose 12% as reported, whereas most investors were looking for 9% growth (including the Brookside deal). Volume jumped 7%, well ahead of expectations of 2-3% growth, and pricing improved over 2%. That makes Hershey one of the strongest volume growth stories in food right now, and perhaps a leading indicator that shoppers have adjusted to years of price resets.

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http://www.investopedia.com/stock-analysis/2013/Investors-Still-Highly-Prize-Hersheys-Consistent-Growth-HSY-MDLZ-NSRGY0205.aspx

Investopedia: Campbell Soup Still More "Ho Hum" Than "Mmm Mmm"

It's largely understood that established packaged/processed food companies are not exactly growth titans. As a result, investors who look at Campbell Soup (NYSE:CPB) as a part of a portfolio of dividend-paying bond alternatives may not be all that put out by the company's sluggish performance. Investors more focused on total returns, however, may need to see more evidence that Campbell Soup management has a real plan to reinvigorate growth before buying these shares.

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