J. M. Smucker currently trades at $105.43 per share and has shown little upside over the past six months, posting a small loss of 3.6%. The stock also fell short of the S&P 500’s 6.1% gain during that period.

Is there a buying opportunity in J. M. Smucker, or does it present a risk to your portfolio? Get the full breakdown from our expert analysts, it’s free.

We don't have much confidence in J. M. Smucker. Here are two reasons why there are better opportunities than SJM and a stock we'd rather own.

Why Is J. M. Smucker Not Exciting?

Best known for its fruit jams and spreads, J.M Smucker (NYSE:SJM) is a packaged foods company whose products span from peanut butter and coffee to pet food.

1. Long-Term Revenue Growth Disappoints

A company’s long-term sales performance signals its overall quality. Even a bad business can shine for one or two quarters, but a top-tier one grows for years. Unfortunately, J. M. Smucker’s 3.8% annualized revenue growth over the last three years was sluggish. This fell short of our benchmark for the consumer staples sector.

2. Previous Growth Initiatives Haven’t Paid Off Yet

Growth gives us insight into a company’s long-term potential, but how capital-efficient was that growth? Enter ROIC, a metric showing how much operating profit a company generates relative to the money it has raised (debt and equity).

J. M. Smucker historically did a mediocre job investing in profitable growth initiatives. Its five-year average ROIC was 5.2%, somewhat low compared to the best consumer staples companies that consistently pump out 20%+.

Final Judgment

J. M. Smucker isn’t a terrible business, but it isn’t one of our picks. With its shares trailing the market in recent months, the stock trades at 10.5× forward price-to-earnings (or $105.43 per share). This valuation multiple is fair, but we don’t have much faith in the company. We're fairly confident there are better investments elsewhere. Let us point you toward Cloudflare, one of our top software picks that could be a home run with edge computing.

Stocks We Would Buy Instead of J. M. Smucker

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