Food Processing Stock Chomping on Resistance Levels, Working on a Breakout

Boring can be beautiful too, particularly in the investment world. Though Corn Products International Inc. (NYSE: CPO) is not likely to set the world on fire by any stretch of the imagination in 2010, what it lacks in pizazz it should make up for in reliability.

The food processing/packaging company has topped estimates in three of its last four quarters. Don’t get too excited, as the twelve-month P/E is still a hefty 75.1. The point is simply to indicate an analyst penchant for underestimating how well Corn Products International Inc. can do. On the other hand....

Now fast-forward to today, and the outlook for 2010. The historical P/E of 75 melts into a projected P/E of 12.3 in what should be a year margins are restored. The anticipated EPS of $2.52 isn’t out of reach either… Corn Products International Inc. earnings came in at $3.59 per share in 2008, which was not the warmest of environments for any industry. (And those were ’real’ earnings too – not just an accounting opinion.)

As for the timing, CPO has been consolidating for the better part of the last four months. Over the last two weeks though, stronger buying volumes and an attack on the upper edge of that consolidation zone has suggested the stock is poised to breakout. A ‘once and for all’ move above $32.00 could seal the deal for the breakout.

A target of $49 within the next one to two years isn’t out of the question.