An Insider Just Bought Hedge Fund Darling Mead Johnson Nutrition CO (MJN)

Wall Street analysts are optimistic on Kellogg Company (NYSE:K), but even given their forecasts for higher EPS the forward P/E comes out to 16. The company us similar to J.M. Smucker in that earnings did quite well last year compared to 2011, but revenue growth was more modest and so we’re somewhat skeptical Kellogg Company (NYSE:K) will hit analyst targets.

Campbell Soup Company (NYSE:CPB) and General Mills, Inc. (NYSE:GIS) are good defensive stocks, with beta statistics of 0.2 or lower (and General Mills also boasts a dividend yield of over 3% at current prices). However, earnings numbers here have not been as good: Campbell Soup Company (NYSE:CPB) actually reported a decline in net income in the fiscal quarter ending in January from a year ago, while General Mills, Inc. (NYSE:GIS) saw very little change in its last quarterly report. These stocks are also not particularly cheap, at 17 times forward earnings estimates, and while the stability of these companies makes them less sensitive to economic conditions we’d imagine that it also limits their upside opportunities from growth.

Even with the insider purchase, we wouldn’t recommend buying Mead Johnson Nutrition CO (NYSE:MJN) right now. Food stocks in general don’t seem to be good values, and that company is trading at a considerable premium to its peers; in addition, revenue and earnings numbers have not been as strong as we would like for a company valued at such high multiples.

Disclosure: I own no shares of any stocks mentioned in this article.