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America's PB&J Obsession: Profit With This Recession-Proof Staple
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Most of us grew up eating peanut butter and jelly sandwiches. They were likely one of the first meals we could make on our own. Their convenience and relative inexpensiveness make them an essential in most households, especially those with children. And surprisingly enough, the nutritional benefits are substantial, including healthy amounts of protein, unsaturated fat, and fiber. A classic sandwich, PB&Js represent a true mix between affordability, nourishment, and comfort food.
Speaking of comfort, there haven’t been many places in the market this year that we can say were a comfortable ride. With most stocks succumbing to the bear market and experiencing slowing growth, places to hide were few and far between. But certain pockets of the market not only held up well, but flourished under the radar as the certainty and stability associated with their products drew heavy investment and increased buying pressure.
One clear example that held up well this year is the Zacks Food – Miscellaneous industry, which currently ranks in the top 35% out of approximately 250 industry groups. Part of the Zacks Consumer Staples sector, the group has outperformed the market at nearly every turn this year, with a +3.4% return versus a -16.8% loss for the S&P:
Image Source: Zacks Investment Research
Because this group is ranked in the top half of all Zacks Ranked Industries, we expect it to outperform the market over the next 3 to 6 months. Quantitative research suggests that approximately half of a stock’s future price appreciation can be attributed to its industry group. In fact, the top 50% of Zacks Ranked Industries outperforms the bottom 50% by a factor of more than 2 to 1. By focusing on stocks within top-rated industries, we can dramatically improve our odds of success.
Let’s take a deeper look at a highly-ranked stock within this leading industry group.
The J.M. Smucker Company manufactures and markets branded food and beverage products worldwide. In addition to peanut butter and fruit spreads, SJM offers mainstream roast, ground, single serve, and premium coffee; frozen sandwiches and snacks; baking mixes and ingredients; juices and beverages; and pet food and related items.
The company provides its products under established brands such as Meow Mix, Pup-Peroni, Folgers, Dunkin’, Jif, and Smucker’s. SJM sells its products through direct sales and brokers to food retailers, discount and dollar stores, pet specialty stores, mass merchandisers, and online retailers. The consumer staple remains a leader in the U.S. at-home retail coffee category.
A Zacks Rank #2 (Buy), SJM has exceeded earnings estimates in each of the last four quarters, with an average surprise of 18.5%. Just this morning, the food and beverage company reported fiscal Q2 EPS of $2.40/share, a 9.59% beat over consensus estimates. Sales of $2.21 billion also surpassed estimates by 2.05%. Shares have risen 11% this year and are currently trading near a 52-week high – a sign of strength.
Image Source: Zacks Investment Research
Despite the impressive performance, SJM stock remains relatively undervalued, irrespective of the metric used:
Image Source: Zacks Investment Research
In addition, SJM pays a healthy $4.08 (2.79%) dividend. This stock has not only weathered the 2022 bear market, but it has flourished, illustrating management’s ability to navigate one of the most difficult environments in many years. Be sure to keep an eye on SJM as the stock appears primed to continue its outperformance.
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America's PB&J Obsession: Profit With This Recession-Proof Staple
Most of us grew up eating peanut butter and jelly sandwiches. They were likely one of the first meals we could make on our own. Their convenience and relative inexpensiveness make them an essential in most households, especially those with children. And surprisingly enough, the nutritional benefits are substantial, including healthy amounts of protein, unsaturated fat, and fiber. A classic sandwich, PB&Js represent a true mix between affordability, nourishment, and comfort food.
Speaking of comfort, there haven’t been many places in the market this year that we can say were a comfortable ride. With most stocks succumbing to the bear market and experiencing slowing growth, places to hide were few and far between. But certain pockets of the market not only held up well, but flourished under the radar as the certainty and stability associated with their products drew heavy investment and increased buying pressure.
One clear example that held up well this year is the Zacks Food – Miscellaneous industry, which currently ranks in the top 35% out of approximately 250 industry groups. Part of the Zacks Consumer Staples sector, the group has outperformed the market at nearly every turn this year, with a +3.4% return versus a -16.8% loss for the S&P:
Image Source: Zacks Investment Research
Because this group is ranked in the top half of all Zacks Ranked Industries, we expect it to outperform the market over the next 3 to 6 months. Quantitative research suggests that approximately half of a stock’s future price appreciation can be attributed to its industry group. In fact, the top 50% of Zacks Ranked Industries outperforms the bottom 50% by a factor of more than 2 to 1. By focusing on stocks within top-rated industries, we can dramatically improve our odds of success.
Let’s take a deeper look at a highly-ranked stock within this leading industry group.
The J.M. Smucker Co. (SJM - Free Report)
The J.M. Smucker Company manufactures and markets branded food and beverage products worldwide. In addition to peanut butter and fruit spreads, SJM offers mainstream roast, ground, single serve, and premium coffee; frozen sandwiches and snacks; baking mixes and ingredients; juices and beverages; and pet food and related items.
The company provides its products under established brands such as Meow Mix, Pup-Peroni, Folgers, Dunkin’, Jif, and Smucker’s. SJM sells its products through direct sales and brokers to food retailers, discount and dollar stores, pet specialty stores, mass merchandisers, and online retailers. The consumer staple remains a leader in the U.S. at-home retail coffee category.
A Zacks Rank #2 (Buy), SJM has exceeded earnings estimates in each of the last four quarters, with an average surprise of 18.5%. Just this morning, the food and beverage company reported fiscal Q2 EPS of $2.40/share, a 9.59% beat over consensus estimates. Sales of $2.21 billion also surpassed estimates by 2.05%. Shares have risen 11% this year and are currently trading near a 52-week high – a sign of strength.
Image Source: Zacks Investment Research
Despite the impressive performance, SJM stock remains relatively undervalued, irrespective of the metric used:
Image Source: Zacks Investment Research
In addition, SJM pays a healthy $4.08 (2.79%) dividend. This stock has not only weathered the 2022 bear market, but it has flourished, illustrating management’s ability to navigate one of the most difficult environments in many years. Be sure to keep an eye on SJM as the stock appears primed to continue its outperformance.