ConAgra Foods, Inc. (NYSE:CAG) continues to improve its product portfolio to tap into higher market demand. The company’s popular brand – Healthy Choice – recently extended its Healthy Choice Simply Cafe Steamers product category with four new dishes made with the U.S. Department of Agriculture (‘USDA’) certified organic ingredients.
Per the May 2016 reports of USDA, consumers are increasingly shifting toward organically produced food and the growth rate is currently in double digits. Recent industry statistics shows that more than 4% of U.S. food sales are organic products. Consumers have even been paying higher prices for organic products owing to factors like health benefits, environmental protection or animal welfare. Thus, ConAgra’s latest product launch is in sync with the trend of growing demand for organic products.
The four new varieties introduced by ConAgra’s Healthy Choice menu include Unwrapped Burrito Bowl, Sweet & Spicy Asian-Style Noodle Bowl, Three Cheese Tortellini and Creamy Spinach & Tomato Linguini. Notably, the new courses are prepared with only Non-GMO (genetically modified organism) ingredients. Despite the products being organic, ConAgra has kept its products pocket friendly for buyers with prices around $3.29.
Our Take
ConAgra remains exposed to headwinds like high volatility in consumers’ brand loyalty, lower wage growth and high income inequality in the U.S. Also, economic slowdown in emerging markets has been hampering the company’s business of late. However, positives like better price/mix, lower costs, efficient marketing, greater investments for innovation as well as strategic business restructuring should support growth.
We expect the Healthy Choice menu expansion to support the company’s near-term revenue growth. Share price of the company stood at $48.30 per share as of Jul 8, 2016. We expect the aforesaid menu expansion would result in stock price movement.
Zacks Rank and Stocks to Consider
ConAgra currently carries a Zacks Rank #3 (Hold). Some better-ranked stocks in the industry include Post Holdings, Inc. (NYSE:POST) , The J. M. Smucker Company (NYSE:SJM) and SUPERVALU Inc. (NYSE:SVU) .
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