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Topic: Growth Stocks

CAMPBELL SOUP CO. $48 – New York symbol CPB

CAMPBELL SOUP CO. $48 (New York symbol CPB; Conservative Growth Portfolio, Consumer sector; Shares outstanding: 311.8 million; Market cap: $15.0 billion; Price-to-sales ratio: 1.8; Dividend yield: 2.6%; TSINetwork Rating: Above Average; www.campbellsoupcompany.com) is the world’s largest maker of canned soups. It also makes Prego canned pasta and sauces, Pepperidge Farm cookies and V8 vegetable juices.

To cut its reliance on canned foods, Campbell is expanding its fresh-food businesses. In 2013, it paid $1.55 billion for Bolthouse Farms, a producer of carrots, dressings and fruit juices. It also acquired leading organic food producer Plum for $249 million.

At the same time, Campbell is cutting costs by eliminating management positions and merging overlapping functions at its divisions. The company expects these moves to save it $200 million a year starting in fiscal 2016.

Meanwhile, Campbell earned $182 million in its fiscal 2015 third quarter, which ended May 3, 2015, down 0.5% from $183 million a year earlier. Earnings per share were unchanged at $0.58.

Sales fell 3.6%, to $1.9 billion from $2.0 billion. That’s mainly because Campbell is giving fewer discounts to retailers. If you exclude the negative effect of currency exchange rates, sales fell just 1%.

For all of fiscal 2015, the company will likely earn $2.35 a share, and the stock trades at 20.4 times that figure. That’s still an acceptable multiple in light of Campbell’s falling costs and well-known brands. The $1.25 dividend yields 2.6%.

Campbell Soup is a buy.

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