While the overall market may be trending higher or lower, individual sectors can sometimes buck that trend. The current bull market has had a few sectors remain out of favor. One of those has been in the packaged food space.
However, that’s starting to change. These stocks are now starting to trend higher, and companies within this sector with strong earnings could be great performers in the months ahead.
For instance, packaged food giant Conagra Brands (CAG) just reported better-than-expected earnings and revenues. That helped push shares higher, but they’re still down 20% compared to a year ago.
The year-over-year numbers still look ugly, with a 25% slide in earnings and a 3% drop in revenues.
The company’s branded products helped pass on most of the recent inflation, as seen by the small drop in revenues. With earnings now improving, shares could be headed back to their old 52-week highs.
Action to take: Conagra trades at 15 times earnings and still sports a 4.7% dividend. With shares still in an uptrend, today’s buyers can play momentum and earn an above-average income.
For traders, the September $33 calls look attractive here. Last trading for about $0.80, they could see high double-digit returns on a further uptrend in the next five 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 company mentioned in this article.