ConAgra Foods Inc. $22 – New York symbol CAG

CONAGRA FOODS INC. $22 (New York symbol CAG; Income Portfolio, Consumer sector; Shares outstanding: 487.6 million; Market cap: $10.7 billion; WSSF Rating: Above average) makes a wide variety of packaged foods. Major brands include Chef Boyardee (pasta), Healthy Choice (diet foods), Orville Redenbacher (popcorn), Reddi-wip (whipped cream) and Hunt’s (canned tomatoes and sauces). In the past few years, ConAgra has sold off its fresh food and animal feed operations to focus on its more profitable processed food businesses. An ongoing cost cutting plan continues to help ConAgra cope with higher prices for ingredients and fuel. In its second fiscal quarter ended November 25, 2007, ConAgra earned $0.53 a share, up 35.9% from $0.39 a year earlier. The latest earnings exclude costs related to the recall of contaminated peanut butter and pot pies. The company quickly fixed these problems, and has resumed production. Sales rose 12.9%, to $3.5 billion from $3.1 billion. ConAgra aims to expand its international sales, which provide just 5% of its total sales. Overseas sales rose 13% in the most recent quarter on strong demand for popcorn and canned pasta in Latin America. ConAgra should earn $1.59 a share in fiscal 2008, which gives it a p/e of 13.8. The $0.76 dividend seems safe, and yields 3.5%. ConAgra is a buy.

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