Nov. 21 (Bloomberg) -- Judging by Dayna Neumann’s pantry, Campbell Soup Co. may turn the U.S. recession into rising sales, just as it did in the last two contractions.

Neumann’s family in Louisville, Kentucky, is bracing “for a rough road ahead,” the 32-year-old working mother said. After her 30-year-old husband, Nick, substituted $1.75 Campbell Chunky soup for restaurant lunches in September, she started buying as many as 15 cans at a time.

The recession will make 2009 “the year of condensed soup, driven by the backdrop of severe economic pressure on the consumer,” Mitchell Pinheiro, a Philadelphia-based analyst at Janney Montgomery Scott LLC, wrote in a note yesterday.

The appeal of a cheap meal is turning the world’s largest soupmaker, which says it sells to 85 percent of U.S. households, into an outperformer in hard times. The shares led the 12- company Standard & Poor’s Packaged Foods Index over the past three months before today, and their 1.5 percent gain this year beat the S&P 500 by 44 percentage points.

Camden, New Jersey-based Campbell is “acknowledged as a way to weather a recession,” said Edgar Roesch, a Soleil Securities Corp. analyst in New York who rates the shares a buy.

Campbell may outdistance General Mills Inc., maker of Progresso soup, in shipments in 2009, according to Terry Bivens, a JPMorgan Chase & Co. analyst in New York.

Buy Recommendations

Bivens, the top-ranked analyst in a Bloomberg survey for his returns on Campbell recommendations, raised the 12-month target price on Nov. 17 to $44.50, 23 percent higher than today’s $36.27 close in New York Stock Exchange composite trading. Second-ranked analyst Pinheiro yesterday recommended buying the shares, citing condensed soup as the company’s “most profitable business.”

The food producer has survived 28 recessions, two world wars and the Great Depression over its 139-year existence. “Historically, Campbell’s soup sales have done well during tough economic times as consumers look for value,” said spokesman Anthony Sanzio.

Campbell’s U.S. soup sales accelerated by 6 percent in the fiscal 12 months ended July 2001, a period that included part of a recession running from March through November of that year, according to the National Bureau of Economic Research in Cambridge, Massachusetts.

Soup sales rose 7 percent in the year ended July 1990 and 5 percent in the next 12 months, overlapping the contraction from July 1990 through March 1991.

‘No Recession in Eating’

As the economy has slowed in 2008, the company’s soup sales in Wal-Mart Stores Inc. have climbed 12 percent to 14 percent since late August, according to Alton Stump, an analyst at Longbow Research in Independence, Ohio, who polled managers at 50 locations. He has a “neutral” rating on Campbell.

“There will not be a recession in eating,” said Harry Balzer, who has studied U.S. eating habits for more than 30 years for NPD Group, a market research firm based in Port Washington, N.Y. “There will only be winners and losers.”

Rising home foreclosures and <a href="blpnews:linkid=EFF32ZXTXKU3">unemployment that pushed consumer confidence to its lowest level in October triggered “a shift to value,” Balzer said.

Fifty-seven percent of households are serving leftovers for dinner, according to Balzer, versus an historic mean of 55 percent. U.S. workers took an average of 42 homemade meals to work in the 12 months through February, the most since 1995, he said.

The current recession will give an advantage to suppliers who help consumers “moderate food costs without cooking more,” Balzer said.

2 for $1

Campbell controls about 70 percent of the $5 billion-a-year U.S. soup market and is offering two-cans-for-$1 deals recently to maintain the lead.

Sales of the iconic red-and-white cans of condensed soup, which must be mixed with water, advanced 6 percent in the quarter ended Aug. 3, the company said. Ready-to-serve varieties increased 5 percent as Americans ate at home more, it said.

Campbell plans to report quarterly earnings Nov. 24. Profit of 77 cents a share, versus 70 cents a year earlier, is projected by 14 analysts surveyed by Bloomberg.

Measured by shipments to retailers, Campbell’s volume will increase an estimated 3.5 percent this year and 3.9 percent in 2009, said JPMorgan’s Bivens. He projects decelerating shipments for General Mills, cereal maker Kellogg Co. and Sara Lee Corp., which sells Jimmy Dean sausages and frozen desserts.

Losing Ground

Campbell lost ground to Progresso over the past five years in sales of soup that’s ready to eat from the can. The market share slipped to 48 percent in the year through Sept. 7, down from 58 percent in 2003, according to Information Resources Inc., a Chicago-based market researcher. Over that period, Progresso’s share has grown 7 percentage points to 35 percent.

“Progresso has been gaining share pretty dramatically in ready-to-serve soup,” said Thomas Forsythe, a General Mills spokesman. He wouldn’t comment on Campbell.

Douglas Conant, 57, chief executive officer since 2001, spent $115 million on research and development in the last fiscal year, up 12 percent from the previous two. His increased investment has led to the introduction of pop-top lids, microwavable soups and, more recently, varieties with less salt and fewer chemical additives. He declined to comment.

“They’ve gone on the offensive in the ready-to-serve segment,” said Roesch, the Soleil Securities analyst referring to recent newspaper ads that say Progresso chicken noodle contains flavor enhancer monosodium glutamate while Campbell’s Select Harvest doesn’t.

“They’ve been waiting until they had a product that in some ways is superior,” Roesch said.

Tuna Casserole Time

Jo-Lynne Shane in Philadelphia stopped making chicken Marsala and other costly dishes after her husband, Paul, 39, urged her to spend less on groceries. The 36-year-old homemaker, who contributes to the Silicon Valley Moms blog that offers how- to-spend-less advice, serves Campbell’s Chicken & Stars soup to her three children and makes casseroles with Cream of Mushroom.

“My husband was bugging me to cut back,” Shane said. “He said he could even stand tuna casserole once a month.”

To contact the reporter on this story: Chris Burritt in Greensboro, North Carolina, at cburritt@bloomberg.net.

Last Updated: November 21, 2008 16:30 EST