Consumers may be cutting back on higher-priced goods right now as housing and fuel costs have been on the rise. But for some consumer goods, raising prices to contend with inflation hasn’t been a problem.
These consumer goods companies are thus able to maintain their profit margins, even as other companies are facing a squeeze thanks to the high rate of inflation right now. Such companies also provide investors with a safe-haven in the stock market, as growth names have fallen well out of favor.
One company delivering on inflation-busting results right now is
Campbell Soup Company (CPB). The company handily beat analyst expectations for earnings. And the company managed to increase revenue, while it also was able to raise prices for its goods.
Shares are just slightly higher over the past year, even as the overall market is slightly lower. And shares trade at 16 times forward earnings, a reasonable price for a basket of brands that can continue to increase prices and pass on inflation to their customers.
Action to take: The company is a solid dividend payer as well, with a 3.2 percent starting yield here. However, dividend growth has been a bit slow in recent years.
For traders, the stock makes a reasonable holding for anyone expecting a further downside in growth stocks from here in particular. Shares can rise thanks to the overall market or as traders move to get increasingly defensive. That makes the November $50 calls, last going for about $2.10, attractive. The option can likely deliver mid-double-digit gains in the coming months.
Disclosure: The author of this article has no position in the company mentioned here, but may trade after the next 72 hours. The author receives no compensation from any of the companies mentioned in this article.
