CPB, Campbell Soup

cpb feb 17 2016

Campbell soup doesn’t just make soup, they are in dozens of other food lines as well. The recipe for their chicken soup is no doubt top secret but we suspect that you start with a swimming pool full of water, add a truckload of salt, and fly a chicken over it. Tweak that with a dash of pepper and vwala you have 10000 servings. But that is not why you should sell this stock, even if, after 28 years you are still under water by 65 cents. Here is why you should:

1. It has a P/E north of 29, about twice the average. This is not a growth stock (see 10).

2. It is about to double top, always potentially a critical point in a stock’s life.

3. There is a plausible wave count that suggest everything after 2003 is a B-wave, C is next.

4. The stock is in the vertical stage, always a  non-sustainable or terminal stage.

5. The stock is trading above it’s channel of 35 + years, see what happened last time.

6. Because the stock outperformed the by 38% last year.

7. Because we are at a critical Fibonacci number in the stock’s price.

8. Net income declined by>20% yoy, and was just 62 (Fibo.) cents per share last quarter.

9. The 2.05% yield is less than the 2.20% on a risk-free treasury bond of 20 years.

10. The company is starting a venture capital business to find “growth”!

11. Analysts downgraded the stock on Jan.16 2016 from buy to hold. Are they right this time?