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
blog comments powered by Disqus
Insider Monkey Headlines
Insider Monkey Small Cap Strategy
Insider Monkey Small Cap Strategy

Insider Monkey beat the market by 52 percentage points in 24 months Click to see monthly returns in table format!

Lists

10 Most Influential Papers In Economics

Top 8 Biggest Charities in the US

10 Worst Celebrity Career Moves Ever

Top 10 Best Paid Tennis Stars in the World

10 Cities with High Demand for Nurses

6 of the Worst Greeting Card Messages Ever Crafted

6 Ways to Make Money in ArcheAge and Build Your Empire

10 Foods To Eat To Lower Cholesterol Levels

The 10 Most Hated Television Characters of All Time

The 30 Worst Halloween Costume Ideas Ever Brought to Horrible Life

10 Vocational Skills in Demand Today with Jobs Waiting to be Filled

10 Best Places to Visit in Central and South America

The 10 Greatest Empires in History Which Nearly Conquered the World

The 6 Cheapest Boarding Schools In America 2015

5 Clear Reasons LoL is Better than DotA, Continues to Rule MOBAs

The Only 9 Teams with a Chance to Win the Super Bowl

The 15 Most Common Phobias in America that Induce Fits of Panic

Top 6 Least Expensive Tourist Destinations in 2014

Jim Goetz, Peter Fenton, Jim Breyer: Top 6 Venture Investors for 2014

Top 15 Billionaires in 2014

5 Pitfalls To Avoid When Buying a Franchise

Top 20 Medical Schools in the US – 2014 Rankings

4 Business Strategies that Turned Jamie Oliver into the World’s Richest Chef

6 Qualities That Make You A Good Team Player

10 High Paying Seasonal Jobs in America this Holiday Season

The 10 Busiest Shipping Lanes in the World

5 Most Valuable Brands in China

The 10 States with Highest Substance Abuse Rates Crippling Their Populace

The Top 10 Things to Do Before You Die That Will Echo for Eternity

The 10 Best Selling Items on Etsy

Top 10 Things to Do in Tokyo, the Greatest City in the World

10 Mistakes on Social Media that Can Harm You and Will Probably Get You Canned

The 10 Best Cities to Find Jobs in 2014

The 10 Most Controversial Songs Of All Time to Hit (and get Banned from) the Airwaves

The 20 Biggest IPOs in US History

The 10 Best Places to Visit in Mexico that Are Beautiful and Safe

7 Bad Habits that Age You Beyond Your Years

The 40 Best Fortune Cookie Sayings That Will Leave You Bemused, Befuddled, or Beguiled

10 Foods to Eat Before a Workout to Make Every Drop of Sweat Count

The 5 Best Documentaries On Netflix You Must See

The Most Heartwarming and Inspirational Story Of This Halloween Season, It Will Make You Cry and Jump For Joy

10 Best Party Songs of All Time to Bring the House Down With

5 New World Order Conspiracy Theories that Will Strangle the World

The 10 Highest Rated Movies of 2014

The 10 Largest Container Shipping Companies in the World

The 10 Largest Armies in the World: Who Should We Be Afraid Of?

Best Warren Buffett Quotes on Money You Need to Hear

The 10 Highest Suicide Rates by Profession

The 20 Most Underrated Movies of All Time

The 10 Fastest Growing Companies in America

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!