ConAgra Foods, Inc. (CAG), CHS Inc. (CHSCP): A Positive Outlook for This Joint Venture

Page 1 of 2

Major grain companies ConAgra Foods, Inc. (NYSE:CAG)Cargill, and CHS Inc. (NASDAQ:CHSCP) are undertaking a major joint venture called Ardent Mills. By merging Horizon Milling, a Cargill and CHS joint venture, with ConAgra Mills, Ardent Mills will become the largest flour milling company in the United States with 44 flour mills, three bakery mix facilities, and a specialty bakery under its control.

ConAgra Foods, Inc. (NYSE:CAG)

This merger promises to protect the grain market positions with baking plants that are facing division among new or different operators. Expected to make up 34% of the U.S. market in terms of milling capacity, this merger will be of major significance in the grain industry.

Who will benefit?

CHS Inc. (NASDAQ:CHSCP), a Minnesota-based agribusiness owned by farmers, ranchers, and cooperatives across the United States, and Cargill, a privately-owned, Minneapolis-based international producer and marketer of food, agricultural, financial, and industrial products and services have already undergone a successful joint venture, Horizon Milling. So successful in fact, Horizon Milling is now considered to be the number one U.S. milling company with the highest milling capacity and reported sales of $ 2.5 billion in fiscal 2012.

This joint venture has also been increasingly profitable over time with CHS Inc. (NASDAQ:CHSCP)’s share of earnings in 2012 amounting to $2.3 million more than in 2011. With an 11% increase in stock price over the past year, CHS is not entering in on this joint venture as a last resort. Not only has CHS performed well in 2012, it has had increasing and steady growth over the past five years as seen by a 28% increase in stock price.

ConAgra Foods, Inc. (NYSE:CAG), a Nebraska-based consumer and commercial foods producer, also had a fantastic 2012. As the number three U.S. milling company with reported sales of $1.8 billion in 2012, this joint venture will only mean bigger and better things for ConAgra. ConAgra has seen an even larger increase in stock price in 2012 than CHS Inc. (NASDAQ:CHSCP) with a 41% jump during the past year from prices rising from $25 to $35.

So far, ConAgra Foods, Inc. (NYSE:CAG) has increased its earnings 16.87% this year. Additionally, there has been a 25% increase in EPS so far in the 2013 fiscal year compared to the entire 2012 fiscal year. Acquisitions of well known brands such as Del Monte Canada, National Pretzel Company, and Kangaroo Brand pita chips and the coveted position as Wal-Mart Stores, Inc. (NYSE:WMT)‘s number two multinational supplier may be responsible for much of this increase.

This merger has been so favorably received that set backs like the recall of Orville Redenbacher’s Classic Kettle Korn due to packaging problems about a week before the merger announcement, has not even made a dent in ConAgra Foods, Inc. (NYSE:CAG)’s progress. With a P/E of 26.6, investors are excited about ConAgra’s growth. Analysts predict that ConAgra will increase in stock price by 6.7% to 24.4% over the next 12 months.

Page 1 of 2
Comments
Insider Monkey Small Cap Strategy
Insider Monkey Small Cap Strategy

Insider Monkey beat the market by 52 percentage points in 24 months. Our beta is only 1.2 (don't click this link if beating the market isn't important to you).

Lists

The 10 Most Expensive iPhone Apps

The 9 Most Expensive Designer Shoes in the World

The 10 Most Expensive Cigarette Brands

The 10 Most Expensive Law Schools in the US

The 10 Best Wall Street Movies

The 10 Most Expensive Golf Clubs Ever Sold

The 10 Most Expensive Golf Memberships

The 10 Best Disney Characters Ever Created

The 8 Best Foods for Gaining Weight

The 10 Most Expensive Colleges in the World

The 7 Most Memorable Ad Campaigns of All Time

The 7 Most Expensive High Schools in the World

The 10 Electric Vehicles with the Longest Range

The 10 Cities with the Worst Drivers in the World

The 10 Most Expensive Dresses Ever Created

10 Islands to Visit Before You Die

10 Famous Celebrities Who Needed Rehab

The 15 Countries with the Largest Oil Reserves

The 10 Most Overused Excuses in the World

The 5 Best iOS Apps You Can’t Get on Android

5 Companies Damaged By Social Media Blunders

The 10 Most Legendary Blues Songs

The 10 Most Lawless Places in the World

4 Reasons China is a Threat to the US

The 17 Most Sugary Drinks in the World

The 10 Most Ruthless Rulers in History

The 10 Greatest Generals in History

Top 8 Travel Destinations for 2015

The 10 Safest Dog Breeds for Children

The 10 Most Stolen Vehicles in the US

The 7 Most Expensive Celebrity Weddings

The 10 Best LoL Teams in the World

Top 10 Worst Marketing Campaigns Ever Produced

Top 5 Diets that Help You Lose Weight

The 10 Best Ways to Stay Awake

7 Artists That Switched Musical Genres

The 10 Most Expensive Cities to Live in New Jersey

The 10 Best High Schools in New York

The 10 Countries With the Least Gender Inequality

The 6 Biggest Musician-Manager Feuds

The 10 Countries with the Cheapest Gas Prices

The 7 Most Theatrical Bands of All Time

The 8 Worst Band Breakups of All Time

The 10 Most Important South American Leaders

The 7 Most Successful Casting Show Winners

The 10 Most Peaceful Countries in the World

5 Big Reasons Communism Failed

The 15 Most Famous Carl Icahn Quotes

10 Scary Animals that are Actually Harmless

The 8 Most Famous Singer-Actors in Entertainment

Subscribe

Enter your email:

Delivered by FeedBurner

X

Thanks! An email with instructions is sent to !

Your email already exists in our database. Click here to go to your subscriptions

Insider Monkey returned 47.6% in its first year! Wondering How?

Download a complete edition of our newsletter for free!