Profit from this recession-proof staple

Most of us grew up eating peanut butter and jelly sandwiches. It was probably one of the first meals we could make on our own. Their convenience and relative cheapness make them a must-have in most families, especially those with children. Surprisingly, the nutritional benefits are great, including healthy amounts of protein, unsaturated fats, and fiber. The classic PB&Js sandwich is a true blend of affordability, nutrition and comfort food.

Speaking of comfort, there weren’t many places on the market this year that we could say were a comfortable ride. With most stocks succumbing to the bear market and experiencing slowing growth, hiding places were few and far between. But some pockets of the market have not only held up well, but have thrived under the radar as the certainty and stability attached to their products has drawn massive investment and increased buying pressure.

One clear example that has held up well this year is Zacks Food – Miscellaneous Industry, which currently ranks in the top 35% of about 250 industry groups. Part of the Zacks Consumer Staples segment, 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:

Zacks Investment Research

Zacks Investment Research

Image source: Zacks Investment Research

With this group rated in the top half of all Zacks rated industries, we expect it to outperform the market over the next three to six months. Quantitative research indicates that approximately half of a stock’s future price rise can be attributed to its industry group. In fact, the top 50% of Zacks-rated industries outperform the bottom 50% by a factor of more than 2 to 1. By focusing on stocks in top-rated industries, we can greatly improve our odds of success.

Let’s take a deeper look at the highly rated stocks within this leading industry group.

JM Smucker Co. (SJM)

The JM Smucker Company manufactures and markets brand name food and beverage products worldwide. In addition to its peanut butter and fruit spread, SJM offers regular roast, ground, single-brew, and premium coffee; Sandwiches and frozen snacks. Baking mixes and ingredients. Juices, beverages, pet food and related items.

The company offers its products under well-known 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, wholesalers, and online retailers. Major Consumer continues to be the leader in the home retail coffee category in the United States.

Ranked Zacks #2 (Buy), SJM has beat earnings estimates in each of the past four quarters, with an average surprise of 18.5%. Just this morning, the food and beverage company reported fiscal second-quarter earnings of $2.40/share, beating the 9.59% consensus estimate. Sales of $2.21 billion also beat estimates by 2.05%. Shares are up 11% this year and are currently trading near a 52-week high – a sign of strength.

Zacks Investment Research

Zacks Investment Research

Image source: Zacks Investment Research

Despite the impressive performance, SJM stock remains relatively undervalued, regardless of the metric used:

Zacks Investment Research

Zacks Investment Research

Image source: Zacks Investment Research

In addition, SJM pays a healthy dividend of $4.08 (2.79%). Not only has this stock weathered the 2022 bear market, but it has thrived, demonstrating management’s ability to navigate one of the toughest environments in many years. Be sure to keep an eye on SJM as the stock appears poised to continue its outperformance.

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