5. Conagra Brands Inc (NYSE: CAG)
Illinois-based Conagra sells a variety of food products for both consumers and the food services industry. The company’s products include frozen dinners, hot cocoa, snacks and peanut butter.
Earlier in January, Conagra reported fiscal second-quarter results, posting an organic net sales growth of 8.1%. Adjusted gross margin in the quarter jumped by 144 bps to 29.9% versus the consensus of $29.4%. Adjusted EBITDA increased 16.7% to $712 million. The company’s CEO said that Conagra will benefit from the shifting consumer behavior that is expected to persist even after the pandemic.
As of the end of the third quarter, 35 hedge funds in Insider Monkey’s database had Conagra on their portfolios. The net worth of these positions is $77 million. Here is what we recently said about CAG:
According to Connolly, Conagra had an ‘excellent’ quarter with a 6% rise in net sales due to the increased demand from the public that is caused by the restrictions brought out by the pandemic. “We have a broad base strength and excellent fundamentals. Our consumers have discovered the massive innovation infusion we’ve launched over the past few years and they’re coming back again and again. But food stocks have not been up even when posting strong numbers. The market is clearly demonstrating a bit of a ‘wait and see’ attitude towards food stocks right now”. Sean Connolly also stated that they are not just looking at the absolute strength but also at their company’s relative strength. For him, the relative strength is a ‘critical leading indicator’ that can signal investors which company will emerge stronger.
“We’ve been transforming our portfolio for 5 years now. It has been a massive innovation overall”. He stated, the thing they’re experiencing with the pandemic is that consumers are now discovering that the frozen food they consume today is outstanding. “It’s essentially fresh food that is frozen but it’s on call and ready when they are and it’s a great value. Excellent food, excellent value and they’re buying it again and again,”.