SMUCKER'S: Snack on a Crustable.

J.M. Smucker Co. (SJM - $44.26), the U.S. packaged-food company, provides value in the food aisle for the patient investor. The Company said that in the 2Q ended October 31, 2005, it earned $46.4 million, or 79 cents a share, up from $40.7 million, or 69 cents a share, in the year-ago period. Sales rose an expected 3% to $606.3 million.

Although a great peanut butter and jelly sandwich is a nice treat, it is most important that the bread not be stale. One might argue that the quality of Smucker's recently reported EPS is flat. Note A. of Smuckers recently filed 10Q points out that operating results for the three-month and six-month periods ended October 31, 2005, include an increase of approximately $6.7 million to net sales, or approximately $4.3 million after-tax to net income and $0.07 per share, reflecting a change in estimates of the expected liability for trade merchandising programs. Management did not bury this pronouncement, but put this accounting issue right up front in its filing.

Although the Company remains committed to a long-term growth rate of 8%, management did say that higher energy and petroleum costs would lead to higher input costs like resin, freight and natural gas. Given these margin pressures, Smucker guided bottom-line expectations lower, saying it expects earnings per share growth of 5 percent to 8 percent for the year. Analysts, on average, forecast earnings of $2.79 a share for the year, up 7.3 percent from $2.60 last year, according to Reuters Estimates.

Discounting present news, Smuckers has solid brand value and good cash flow. U.S. market sales were driven by key growth contributors like the Smucker's, Jif, Crisco and Uncrustables brands. During the first six months of fiscal year 2006, cash provided by operating activities was approximately $59.2 million.

Steady top-line growth and improving margins should provide the necessary catalyst for an upward move in Smucker's common stock. Until investors witness the latter, snack on the 2.4% dividend yield ($1.06 dividend) and a Crustable sandwich!