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Peanut Butter and Jam Flying Everywhere – Smucker’s Goes Spastic! (SJM)

Posted on February 11, 2021

Smuckers (NYSE:SJM) is more than just a jam company.

They’re a sticky-sweet sea of solidity in a market gone mad.

Let’s explain.

Smuckers is a fundamentally sound company that has not participated in the Batflu market hype of the last year.

Her stock has bounced about in a relatively tight range (see chart below), yet has grown under the radar as management made significant internal changes that should pay off shortly.

She’s also offered investors a reliable place to park funds while they reap a solid dividend and wait for a breakout.

And today, we want to suggest that that breakout is growing increasingly inevitable.

But before we get there, consider the numbers –

  • SJM trades with an earnings multiple of only 14.94 (TTM),
  • A Price to Book of just 1.54,
  • Offers a fat annual yield of 3.12% – almost unheard of in this market environment – and
  • Is growing earnings at 15.5% a year.
  • Moreover, the stock is now burdened by a sizeable short position (short float – 8.20%; short ratio – 8.53), that we believe will shortly be squeezed like a super-size jar of Jif Squeeze Creamy Peanut Butter – much to the economic (and gastronomic) benefit of shareholders.

Here’s the chart –

Technically, we have

Maximum loss is $3.50 (initial premium).

Maximum gain is theoretically unlimited.

Many happy returns,

Matt McAbby

 

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