Why Campbell, Smucker, and Kraft Heinz Are No-Brainer Buys Right Now
Most food companies, like Kraft Heinz (NASDAQ: KHC) and J.M. Smucker (NYSE: SJM), have been struggling with higher costs. Some of these rising costs are passed along to consumers in the form of higher retail prices; others aren't. It's a fine line to walk.
There's an important shift underway, though. Food commodity costs are coming down, while retail food prices are holding relatively steady. That means precisely what you think it means: The industry's profit margins are on the verge of improving more than they have already.
We caught a brief glimpse of this dynamic in Kraft Heinz's first-quarter report posted in May. Organic net sales were up 9.4% year over year, driven by a 14.7% increase in prices. Gross profit margin correspondingly improved 62 basis points to 32.8%.
Source Fool.com
