Conagra Brands, Inc. (CAG): A Bull Case Theory

We came across a bullish thesis on Conagra Brands, Inc. on Value investing subreddit by Sensitive_Delay_7899. In this article, we will summarize the bulls’ thesis on CAG. Conagra Brands, Inc.'s share was trading at $19.16 as of August 25^th. CAG’s trailing and forward P/E were 7.98 and 10.86 respectively according to Yahoo Finance.

Conagra Brands (CAG), trading at around $19, represents an overlooked value opportunity within consumer staples, offering defensive stability, strong brand power, and meaningful upside potential. The company’s diversified portfolio, spanning frozen meals, snacks, condiments, and shelf-stable meals, provides resilience across economic cycles. Well-known brands such as Marie Callender’s, Healthy Choice, Slim Jim, Hunt’s, and Chef Boyardee ensure consistent consumer demand, while ongoing efforts to modernize product lines with healthier offerings and expand e-commerce channels position the company for long-term relevance.

Operational initiatives focused on supply chain efficiencies and cost management further strengthen margins against inflationary pressures. Financially, Conagra generates roughly $2.3 billion in quarterly revenue and robust free cash flow, enabling a stable dividend yield near 2.7%. While debt is present, it remains manageable, supporting flexibility for growth investments and targeted acquisitions. Valuation is central to the thesis, with a discounted cash flow model assuming 4% annual EBITDA growth, a 2% terminal growth rate, and an 8% discount rate, yielding an intrinsic value of $35.99 per share an upside potential exceeding 80% from current levels.

Risks include inflationary input costs, fierce competition, and macroeconomic headwinds, but catalysts such as product innovation, operational efficiencies, and stronger performance in health-oriented and digital channels could drive meaningful upside. With resilient brands, disciplined financial management, and a significant valuation gap, Conagra offers investors both defensive security and offensive growth potential. At current levels, CAG stands as a classic value investment anchored by a wide margin of safety.

Previously we covered a bullish thesis on Conagra Brands, Inc. (CAG) by Isaac459 in Nov 2024, which highlighted the company’s affordable product lineup, defensive nature during inflationary periods, and resilience despite temporary manufacturing disruptions. The company’s stock price has depreciated approximately by 33% since our coverage. This is because near-term growth stayed muted. The thesis still stands as CAG maintains stability and dividends. Sensitive_Delay_7899 shares a similar thesis but emphasizes significant valuation upside.

Conagra Brands, Inc. is not on our list of the 30 Most Popular Stocks Among Hedge Funds. As per our database, 39 hedge fund portfolios held CAG at the end of the first quarter which was 32 in the previous quarter. While we acknowledge the potential of CAG as an investment, we believe certain AI stocks offer greater upside potential and carry less downside risk. If you're looking for an extremely undervalued AI stock that also stands to benefit significantly from Trump-era tariffs and the onshoring trend, see our free report on the best short-term AI stock.

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Disclosure: None.