ConAgra Hits 52-Week High on New Business Strategies - Analyst Blog
Shares of North American food company ConAgra Foods, Inc. CAG hit a new 52-week high of $45.02 on Jul 2, 2015. The stock, however, closed the trading session slightly lower at $44.56. Since the beginning of fiscal 2015, the stock has gained roughly 42.8%. We believe this Zacks Rank #3 (Hold) stock still has enough fundamentals to drive its price further upward.
Growth Drivers
ConAgra always attempts to conduct its corporate operations optimally so as to ensure highest return from its resources. For instance, at the end of fiscal 2015, the company decided to divest its Private Brands segment because funds invested in the same were found to be sub-optimally utilized. The segmental revenues have been gradually declining due to lower demand of certain items such as cereal, snacks, in-store bakery, pasta and condiments. We believe the company would soon spot new areas of investments that would improve its revenues and margins in the quarters ahead.
Following an inorganic growth strategy, ConAgra has successfully captured the growing market demand for fried potato with the help of the acquired Lamb Weston business. The company also looks forward to the success of the recently acquired Blake’s All Natural Foods business, that will likely tap the demand for frozen food products in the near future.
Going forward too, the company intends to improve its revenues on the back of greater product innovations and efficient marketing strategies. For instance, aided by effective schemes on product, pricing, place and promotion, ConAgra attempts to heighten the demand for its Chef Boyardee, Orville Redenbacher and Healthy Choice brand of products. All the above factors have helped boost investors’ confidence in the stock and are expected to further reinforce it in the long run.
Stocks to Consider
Better-ranked stocks in the industry include Associated British Foods plc ASBFY, Cal-Maine Foods, Inc. CALM and Fufeng Group Limited FFNGY. All three stocks sport a Zacks Rank #1 (Strong Buy).
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CONAGRA FOODS (CAG): Free Stock Analysis Report
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