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ConAgra's 'Confident' in Its Business

Tuesday, 29 Apr 2008 | 7:06 PM ET
Cramer's Food For Thought
An outlook on ConAgra, with Gary Rodkin, ConAgra president & CEO and Mad Money host Jim Cramer.

When ConAgra decided to sell off its commodities-trading division, Cramer figured the market would react positively. After all, the firm was dumping an incredibly volatile business that seemed to scare off some investors. Surely, a pure-play ConAgra would be widely touted by the Street.

Apparently not. The stock’s stuck at $23, and Cramer can’t figure out why. President and CEO Gary Rodkin put the blame on Wall Street, claiming his company has the right formula – a great brand portfolio (Peter Pan, Chef Boyardee, Swiss Miss and others), cost containment and an innovative pipeline of products – to deliver sustainable growth.

“We are very confident in the algorithm that we’ve put forward,” he said.

The deal to get rid of the commodities-trading business isn’t fully completed yet, Rodkin pointed out, but once that’s done he’s confident ConAgra will get back on track.

Rodkin said he’s also sure his company can manage its way through the food-cost pressures, from global demand and government-mandated ethanol, that are hurting so much of the industry.

“Food business is a tough business,” Cramer said. But CAG is cheap, and the stock is priced as if ethanol will continue to drive food costs higher.

“If you think that we are at a peak in the price of food, you buy ConAgra,” he said. “If you don’t, you can’t pull the trigger.”

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