The Zacks Analyst Blog Highlights: Hewlett-Packard, ConAgra Foods, McCormick and Dr Pepper Snapple Group

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Nov 26, 2014, 09:30 ET

CHICAGO, Nov. 26, 2014 /PRNewswire/ -- Zacks.com announces the list of stocks featured in the Analyst Blog. Every day the Zacks Equity Research analysts discuss the latest news and events impacting stocks and the financial markets. Stocks recently featured in the blog include the Hewlett-Packard (NYSE:HPQ-Free Report), ConAgra Foods Inc. (NYSE:CAG-Free Report), McCormick & Company Inc. (NYSE:MKC-Free Report) and Dr Pepper Snapple Group, Inc. (NYSE:DPS-Free Report).

Today, Zacks is promoting its ''Buy'' stock recommendations. Get #1Stock of the Day pick for free.

Here are highlights from Tuesday's Analyst Blog:

Hewlett-Packard Posts Light Revenues

Tech giant Hewlett-Packard (NYSE:HPQ-Free Report) posted fiscal Q4 and full fiscal 2014 earnings after the bell Tuesday. While earnings per share of $1.06 topped the Zacks Consensus Estimate by a penny, revenues of $28.4 billion in the quarter missed our expectations of roughly $28.9 billion. Shares had slipped about 3% in immediate after-market trading, but have since subsided to down about 1.5%.

Weighing down on HP's sales were again the Printing and Enterprise (Group and Services) businesses, which fell 5%, 4% and 7% year over year. Total revenues in the quarter were down 2% from Q4 2013. HP saw strength in its Commercial segment, which posted revenue growth of 7%.

Fundamentals aside, the big news about HP came earlier when the company announced it will be split into two entities: HP Enterprise and HP, Inc. CEO Meg Whitman will retain Chairwoman status of both boards, but Whitman will continue as CEO of HP Enterprise. The key questions for this group will be how HP manages to monetize its services on the Enterprise side -- whether by acquisitions or partnerships with other firms in the cloud space, etc.

Hewlett-Packard gave higher guidance for full fiscal 2015 than the Zacks consensus: the company expects earnings between $3.83-$4.03, whereas we had been expecting $3.73. Upward analyst revisions should pick up Hewlett-Packard's Zacks Rank in the coming days. HP currently carries a Zacks Rank #3 (Hold).

Clearly HP has a lot of work to do in making its split successful and profitable, but it does seem to be on the right track in the early going.

3 Food & Beverage Stocks for Thanksgiving Day

The six-week shopping spree is about to kick-start with Thanksgiving and retailers ready with what U.S. now needs the most – discounts!

Wallets are apparently a bit fatter this year as steeper food prices have been compensated by the magical drop in gasoline prices. The National Retail Federation (NRF) has compiled a 4.1% spending rise forecast for the six-week holiday shopping season. This is much higher than the 3.1% rise last holiday season and average growth of 2.9% over the past one decade. If this season's prediction comes true, U.S. spending will have gone up more than 4% higher for the first time in three years.

Does this seem too good to be true? Thanksgiving is mostly about The Meal with family. Besides turkey, there is also bread stuffing, rolls, butter, sweet and mashed potatoes, carrots, corn, cranberry sauce and of course, beverages. So will high food prices dent the consumer more this time around?

According to the latest data from the American Farm Bureau Federation, the average cost of serving 10 people for Thanksgiving is expected to rise 37 cents from last year to $49.41. While sweet potatoes, dairy products, pumpkin pie mix, coffee, sugar and eggs have seen the largest increase in prices, the big-ticket item – a 16-pound turkey – has fallen by 11 cents to $21.65. About 20% of the annual turkey meat is carved on Thanksgiving Day alone.

Overall, the cost of spending on food is still less than $50 per person, suggesting that America will spend more on food this year as well, which will result in higher revenues for food and beverage companies. Even a small price hike will boost their profit margins. So betting on these stocks should be a winning strategy for investors looking for profits from higher spending on Thanksgiving feasts.

Below, we have highlighted some picks that are supported by a Zacks Rank #2 (Buy), indicating outperformance.

3 Stocks to Consider

ConAgra Foods Inc. (NYSE:CAG-Free Report)

Based in Omaha, NE, ConAgra Foods is one of the largest packaged food companies in North America. It provides branded and private branded foods such as meals, entrees, condiments, sides, snacks, desserts, ready-to-eat cereals and retail bakery goods. The company's lineup also includes globally available commercial foods such as frozen and sweet potato items, dehydrated vegetables and seasonings, and spice and frozen bakery goods.

Some of the leading brands include Banquet, Chef Boyardee, Egg Beaters, Healthy Choice, Hebrew National, Hunt's, Marie Callender's, Orville Redenbacher's, PAM, Peter Pan, Reddi-wip, Slim Jim, Snack Pack, Lamb Weston, and Spicetec Flavors & Seasonings.

McCormick & Company Inc. (NYSE:MKC-Free Report)

Based in Sparks, MD, McCormick is a global leader in creating flavors. It manufactures, markets, and distributes spices, herbs, seasoning mixes, condiments, recipes and other flavorful products to the entire food industry. Some of the major brands are McCormick, Lawrys, Club House, billy bee, Ducros, Schwartz, Kamis, EL Guapo, Lawrys, Kohinoor, Thai Kitchen, Simply Asia, Vahine and DaQiao.

For this Thanksgiving Day, McCormick is offering five special recipes – Thanksgiving Appetizers, Thanksgiving Side Dishes, Thanksgiving Main Dishes and Entrees, Thanksgiving Deserts, and Thanksgiving Leftover Recipes.

Dr Pepper Snapple Group, Inc. (NYSE:DPS-Free Report)

Based in Plano, TX, Dr Pepper Snapple Group is one of the leading beverage companies in the Americas. It manufactures, markets and distributes a broad range of non-alcoholic beverages in the United States, Canada, Mexico, and the Caribbean. The company offers a portfolio of flavored (non-cola) carbonated soft drinks (CSDs) and non-carbonated beverages (NCBs), including ready-to-drink teas, juices, juice drinks, mixers and water.

Some of its well-known CSD brands include Dr Pepper, Canada Dry, 7UP, Squirt, Crush, A&W, Penafiel, Sunkist soda, Schweppes, and Sun Drop while the NCB brands include Snapple, Hawaiian Punch, Motts, Clamato, Mr & Mrs T mixers, and Roses.

Bottom Line

The sumptuous spread clearly isn't limited to the dining table. Turkey Day also spreads optimism in the broad food and beverage space, making the above stocks quite tasty.

Today, Zacks is promoting its ''Buy'' stock recommendations. Get #1Stock of the Day pick for free.

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