ConAgra Foods Inc (NYSE:CAG) — CAG stock fell Tuesday after hitting a new all-time high last week, and the pullback is very close to offering traders a good entry point in this blue-chip food company. This sort of defensive stock is a good choice for the current market environment. While the return potential may not be spectacular, it is solid, and the company pays an annual dividend of $1 per share for a forward yield of more than 2%.
On June 30, ConAgra reported fiscal fourth-quarter revenue of $2.83 billion, which came up short of analysts’ expectations of $2.89 billion. However, earnings of 52 cents per share were in line with estimates.
And management said it was on track to complete the spinoff of its less profitable commercial foods business, Lamb Weston, this fall. This will leave it to focus on its profitable grocery store brands, which include Peter Pan peanut butter, PAM cooking spray, Hebrew National hot dogs Hunt’s, Healthy Choice, Chef Boyardee and Orville Redenbacher’s popcorn, after selling its private label business for $2.7 billion earlier this year.
Capital IQ Equity Research views ConAgra’s split as a positive. Its analysts rate CAG stock a “Buy” and raised their 12-month price target by $5 to $51 in April.
Turning to the chart, we see that CAG stock broke from a six-month consolidation between $37 and $43 in March on a buy signal from my proprietary internal indicator, the Collins-Bollinger Reversal (CBR). Shares hit a new high just below $47 in early April before consolidating in a “W” formation between $44.50 and $47.
CAG stock broke from that formation in June and ran to a new all-time high of $48.81 on Friday. Once again, the break was accompanied by a CBR buy. Above-average volume has supported the advance and the MACD indicator is positive.
Try to buy CAG stock on a slight pullback to $47.50 with a trading target of $55 for a return of almost 16%.
