CNBC’s Jim Cramer noted on Friday that packaged food stocks could be a good addition to a portfolio, especially as the economy slows. While they’re not perfect, he’s encouraged by this week’s gains Campbell’s Soup and JM Smack.
“We’ve had enough signs of weakness that it might be a good idea to own some recession stocks — companies whose stocks make the same amount of money in good and good times because their products are essential,” he said. “For example, how packaged foods are played. “
Cramer said he thought both Campbell Soup and JM Smucker told “compelling” stories this week, but he preferred the former. Campbell Soup Co. reported solid earnings but weaker guidance, in part due to its massive acquisition of pasta sauce maker Sovos Brands, according to Cramer. He said the acquisition will pay for itself over time and was encouraged that the company appeared to be increasing sales without raising prices.
JM Smucker’s sales fell short of expectations, but Cramer was heartened by the company’s success in turning a substantial profit. He also noted that JM Smucker’s brands, such as Uncrustables sandwiches and pet food, are growing well, but said the coffee business needs to improve.
He emphasized that the packaged food group as a whole typically performs well during economic slowdowns and suggested looking into it as well Tyson Foods, Hormel, general mills, ConAgra and Kelanova.
“Ultimately, after listening to Campbell’s and Smucker, I’m becoming more and more positive about the packaged foods space,” Cramer said. “Specifically, of the two stocks, I do prefer Campbell’s … but Smucker still has a great value proposition.”
JM Smucker and Campbell Soup did not immediately respond to requests for comment.
