We came across a bullish thesis on The Campbell’s Company (CPB) on Substack by Scalper’s Lounge. In this article, we will summarize the bulls’ thesis on CPB. The Campbell’s Company (CPB)’s share was trading at $37.95 as of Feb 11th. CPB’s trailing and forward P/E were 20.74 and 12 respectively according to Yahoo Finance.
A stack of grocery bags filled with ready-to-eat cereals, frozen waffles, and savory snacks.
Campbell’s has long been an attractive investment due to its portfolio of elite brands, including Goldfish, Milano, Rao’s, Snyder’s, Lance, Cape Cod, Kettle, V8, and its namesake soups. However, poor management and misguided initiatives have weighed on the stock, making it uninvestable despite its strong brand equity. A turning point has now arrived with the company’s acquisition of Sovos, the parent company of Rao’s, which was purchased at a reasonable price and financed opportunistically with long-term bonds. This move has set off a chain of strategic shifts, including a leadership shake-up. The former CEO has departed, and the company has promoted the former President of Food & Beverage—who spearheaded the Sovos acquisition—to the top position. Additionally, the former general manager of Rao’s, who played a key role in its meteoric rise, has been promoted to President of Food & Beverage. These management changes signal a more focused and competent leadership team, increasing confidence in the company’s future direction.
Despite these positive developments, the market has taken a cautious stance, pricing Campbell’s as a “show me” story. The stock trades at a trailing P/E of 33.5 due to over $400 million in one-off expenses and non-cash writedowns, making it appear optically expensive. However, the company’s CY2025 GAAP EPS multiple sits at just 11.3x, reflecting an unjustified disconnect between market perception and underlying fundamentals. Notably, Campbell’s has now breached its 40-year support trend-line and is trading below the lowest analyst price target of $40, a strong technical signal of potential upside.
Risks remain, including changing health trends that could impact Goldfish sales due to seed oil concerns and potential margin pressures from Rao’s pricing adjustments. However, the combination of improved leadership, a premier brand portfolio, and an undervalued valuation presents a compelling investment opportunity with a favorable risk/reward profile.
The Campbell’s Company (CPB) is not on our list of the 30 Most Popular Stocks Among Hedge Funds. As per our database, 33 hedge fund portfolios held CPB at the end of the third quarter which was 27 in the previous quarter. While we acknowledge the risk and potential of CPB as an investment, our conviction lies in the belief that some AI stocks hold greater promise for delivering higher returns, and doing so within a shorter timeframe. If you are looking for an AI stock that is more promising than CPB but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
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Disclosure: None. This article was originally published at Insider Monkey.