For investors, Campbell Soup (NYSE: CPB) offers unique insight into how Wall Street is valuing consumer preferences in food. Despite poor results from its most recent earnings report, it is up for the last week, month, quarter and year of market action. Why?
Wall Street likes what it sees for the future from Main Street in soup consumption. Investing is, after all, the art of buying the future income stream of an asset.
In a Mintel survey, more than 90 percent responded that soup was a good item to have. About 80 percent said they purchased soup. Nearly four cans were consumed per week.
No wonder then that in 2014, Campbell Soup has risen by 7.57 percent. The same is true for General Mills (NYSE: GIS), which makes Progresso Soups. General Mills is up nearly 12 percent for 2014. Small caps in the sector, such as SoupMan (OTC: SOUP), also look promising.
For giants like Campbell Soup and General Mills, this opportunity will test how well each can respond to changing consumer wants and needs. A small cap like SoupMan has an easier time adjusting to consumer preferences. For example, it can and has created new flavors. It also offers Tetra packaging, which consumers prefer for safety and convenience factors.
As a result, revenues are rising at a 24.90 percent quarterly rate for SoupMan, according to Yahoo! Finance. For Campbell Soup, quarterly revenue growth is a negative 5.90 percent. General Mills, has a quarterly revenue growth rate of negative 1.20 percent.
For growth investors, SoupMan is alluring. But growth isn't the only way to invest; income investors should prefer General Mills and Campbell Soup.
At present, the average dividend yield for a member of the Standard & Poor's 500 Index (NYSE: SPY) is under two percent. For General Mills it is 2.99 percent. The dividend yield for Campbell Soup is 2.72 percent.
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- Consumer Discretionary
- Campbell Soup
- General Mills