Campbell’s is a multi-national food company with a history of over 150 years of making soups and snacks. They own some of the most popular brands you’ll see in your grocery store as shown below. Missing from the list is the recently acquired Sovos Brands, maker of the popular Italian food brands like Rao’s pasta sauce and Michael Angelo’s frozen entrees, as well as noosa yogurt.
Lately, Campbell’s and many consumers defensive stocks have sold off. Why? Ozempic. This revolutionary weight-loss drug has demonstrated remarkable ability to help patients lose weight and prevent diabetes, cardiovascular disease and now kidney failure. Because the drug curbs the users’ appetite, investors are worried that food companies would see a reduction in their sales. Will this happen? It remains to be seen.
What we do know is that patients on the drug must continuously take it forever or risk gaining all the weight back and perhaps more (What happens when you stop taking Wegovy or Ozempic? Many people regain the weight). We also know that the stock is getting really attractive on a historical basis. Let’s go over the technicals.
Below is a monthly chart. Here, you can see that the stock has been trading in an upward parallel channel since the early 2000s. Today, we are at a support that extends from July 2019 and near an even longer support that extends from the lows set after the dotcom bubble.
I am personally focused on the long-term support that extends from the bottom of 2002 because it coincides with the 0.786 Fibonacci line. Since the early 2000s, it seems that the stock often rallies to the top of the red resistance trendline and then retrace back to the 0.786 Fibonacci line before rallying again. As we approach this level, I will be focused on any signs for a bottom. The level to look for is $37.65.
Disclosure: I do not own shares in CPB.
Disclaimer: I am not registered as a securities broker-dealer or an investment advisor. Any analysis you see here is meant for educational purposes and is not trading or financial advice. Any trades or investments made using this post are entirely the reader's decision based on their evaluation of the risks and market knowledge.