Campbell's is turning from Big Food into Small Food because pricing can no longer offset cost inflation. Every line item that matters got worse: 630 basis points of cost inflation headwinds met only 110 basis points of price, which once again hurt volume by 60 basis points. The stock is at a 23-year low and the company has halted buybacks. x.com  x.com 

Campbell's earnings estimates are in an absolutely brutal death march. x.com 

Campbell's should keep falling toward a buyout point near $12 a share, where a market cap of about $4 billion would price in bankruptcy. Its BBB- rating with a negative outlook amounts to rating agencies flagging bankruptcy risk, so institutions and hedge funds will sell or short until it gets there. With no near-term debt due, it would be bought out rather than go bankrupt, as Kenvue was, while Red Robin and Wendy's follow the same path. Buybacks and dividends mean little given its leverage. … Show more

Consumer staples are a lose-lose here because they are already overvalued at 26x forward earnings versus a 22.7x five-year average, the highest since just before the tech bubble burst. With stocks this richly valued, there is little left to rotate into if the economy weakens next year, and the healthcare rotation is well under way. If the economy holds, high rates hurt staples; if it weakens, they are too expensive to hold up even with rate cuts, except perhaps Campbell's. x.com  x.com 

Hershey looks like an obvious short because nearly its entire product line is weak, apart from Milk Duds, classic Reese's, Heath and arguably Twizzlers. If Campbell's trades at 10x earnings, Hershey should trade at about 5x. x.com 

Conagra is priced for permanent decline when the market is really pricing in fear, setting up a turnaround. Its brands, including Slim Jim, Duncan Hines and Birds Eye, sit in 90% of American pantries, yet the stock is down 45% from its highs. A director bought $358,500 of stock at the 52-week low, a new CEO arrives June 1 after an 11-year tenure, and a 9.8% dividend yield pays holders to wait. Morningstar puts fair value at $32 versus a $14 price. x.com 

J.M. Smucker is underrated because its brands, including Jif, Smucker's, Dunkin' packaged coffee, Milk-Bone, Meow Mix and fast-growing Uncrustables, are bought every week regardless of the economy. Coffee costs, supply-chain inflation and an underperforming Hostess deal hurt this year, but fiscal Q4 revenue rose 6% and adjusted EPS 20% to $2.77. It has raised its dividend 28 straight years, keeps the payout under 50% and still trades below its historical valuation. x.com 

General Mills looks like a good buy after a sharp selloff. @tsxman notes it trades at trough multiples, as Campbell's does, possibly dragged down by Conagra's CEO change, and argues that consumers keep buying its products every week. x.com 

Whirlpool is a high-yield stock to avoid, alongside Walgreens Boots Alliance, because its payout ratio showed the dividend risk in advance. Management described recession-level demand, cash flow turned negative, the payout ratio hit 120% and the dividend was cut. Walgreens was worse, cutting its dividend 48% in early 2024 to 25 cents a share after a 47-year record. x.com 

General Mills will struggle to raise prices or grow as GLP-1 drugs and inflation push shoppers toward store brands and away from cereals. It has two years of negative EPS growth and estimates, and its operating cash flow and margins should suffer in that environment. The company does produce cash and is cheap, as @calvinfroedge notes with $2-3B of annual operating cash flow and a shareholder yield above 10%. x.com  x.com