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On Feb 16, Zacks Investment Research upgraded the food products company, ConAgra Foods Inc. (CAG - Analyst Report) to a Zacks Rank #1 (Strong Buy).

Why the Upgrade?

ConAgra has been witnessing rising earnings estimates on the back of strong fiscal second-quarter 2013 results and an enhanced guidance for fiscal 2013. Moreover, this well-known food products company has delivered positive earnings surprises in the past four straight quarters with an average beat of 8.9%. The long-term expected earnings growth rate for this stock is 7.9%.

ConAgra reported fiscal second-quarter (ended Nov 25) results on Dec 20. Earnings per share came in at 57 cents, surpassing the Zacks Consensus Estimate by 3.6% and year-ago earnings of 49 cents by 16.3%.

Earnings were primarily driven by improved potato operations, moderating inflation and contribution from acquired businesses. Based on its progress, the company upped its earnings per share projection for fiscal 2013 to at least $2.06 from prior expectations $2.03–$2.06.

Moreover, the strategic acquisition of Ralcorp Holdings Inc., a branded food company, completed last month, helps the company to become the market leader in packaged foods industry.

The Zacks Consensus Estimate for fiscal 2013 increased 2.9% to $2.12 per share as most of the estimates were revised higher over the last 60 days. The current estimate is much higher than the guidance provided by ConAgra, reflecting optimism about future earnings potential.

For fiscal 2014, around 75% of the estimates moved upwards over the same time frame, lifting the Zacks Consensus Estimate by 4.9% to $2.36 per share.

Other Stocks to Consider

The following food companies with favorable Zacks Rank are also performing well and are worth considering.

1)      Chiquita Brands International Inc. (CQB - Snapshot Report) carries a Zacks Rank #1 (Strong Buy)

2)      Flowers Foods Inc. (FLO - Snapshot Report) holds a Zacks Rank #1 (Strong Buy)

3)      J&J Snack Foods Corp. (JJSF - Snapshot Report) holds a Zacks Rank #1 (Strong Buy).

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