JM Smuckers (NYSE:SJM) is getting some respect out in the market place. Basically they manufacture near commodity level jams and coffees relying on a century old brand name. They just became the focus stock of the week for the American Association of Individual Investors. www.aaii.com You know those small guys who do their home work because they are working their own money.
The AAII has a stong buy expecting the stock to give a 14% return including the dividend. That’s pretty good in this market. Food staples are considered to be neutral. So why Smuckers. Commodity costs are moving their way. Too many peanuts on the farm drives the price down. Other commodities look attractive from this processors point of view.
Maybe with the fiscal cliff problem their will be more peanut butter and jam sandwiches and less fancy expense account lunches in Washington DC [Dream on]
To help matters along Wells Fargo has resumed coverage with a market perform. Hilliard Lyons issues a neutral. But just by issuing a recommendation drives a certain amount of attention which translates into buys. Hilliard Lyons operates in the mid west and south where the Smuckers brand and business are well known.
The short position is about 2.68% of the float and it just shrunk ever so little. Uptick/downtick ratio comes in at 1.35. The stock goes ex-dividend tomorrow but is up some 2% today.
The company is a commodity driven food processor with brands that are somewhat tired. I’m waiting for someone to get the diabetes epidemic and do something clever with peanut butter and sugar laden jams. Right now I’m thinking it will not be Smuckers.
So if you’re an AAII member 14% well yeah maybe but like anything watch like a hawk. Smuckers does not have the Warren Buffett moat around it.
George Gutowski writes from a caveat emptor perspective. Follow him on twitter@financialskepti