|By Nathan Young|
Campbell Soup has been in the news for their recent acquisition of Snyder’s-Lance, which will be financed through $6.2B in both long-term and short-term notes. Campbell is probably most known for their soup, which includes the classic holiday season commercial that depicts a child melting away the cold while consuming the tomato soup. The snack business appears to be the play for Campbell as they push further into the space.
CEO Denise Morrison stated that the combination of the newly acquired Snyder’s-Lance with Pepperidge Farm, Arnott’s and Kelsen will create a diversified snacking leader. Snacks are an extremely competitive market and all you need to do is walk down the chip section to see it. Both stocks were positively influenced in the market upon learning of the news.
Competition in this space is fierce and include companies such as Pepsi Co. Meaning there is more than just food, rather soft drinks and baking can come into the equation. With the given pressure to eat healthier, it could prove to be difficult to sustain current momentum. There are healthier options within the snack food market, but overall they remain unhealthy.
What does this mean as an investor, you can look at it in two lights. First would be the short term play and swing trade any news and momentum from the recent purchase. This is risky but can payoff in the short term. Secondly, you can play the long term game if you belive this purchase will allow the company to grow and compete on new levels, driving more top line growth.
It’s important to look at the overall health of the company to understand if they can whether any storms that might be heading their way. Understand their cash flows and debt levels, ensuring they are not over leveraged. Campbell is a staple name in the food industry but recently has been spinning their wheels. This purchase should look to push them onward and upward, boosting returns for current and future investors.
|This article from Macroaxis published on 19 of December contributed to the next trading period closing price depreciation.The overall trading delta to the next next day price was 0.92% . The overall trading delta when the story was published to current price is 6.15% .|