Adolescence can be rough. Everyone doesn’t get to party with the cool kids. But those who are most ignored sometimes wind up being the big winners after all.

Stock markets often resemble high school in this way. Cliques of stocks are more popular than others from time to time. This is especially true during rallies.

The sector beneficiaries of the current rally are the financials, energy, industrials, and materials. However, after enjoying healthy gains since the financial crisis of 2008, consumer staples stocks have turned in the second-worst performance this past year, coming in just behind utility stocks.

Stocks of consumer staples companies, such as food manufacturers, are often referred to as defensive stocks. If economic times are tough, staples companies should still perform well due to the necessary nature of their products. People have to eat.

#-ad_banner-#However, what’s always struck me as odd is that people have to eat in good times as well as bad times. Nevertheless, consumer staples stocks are currently out of favor, creating opportunities for bargain hunters.

One of my favorite stocks in the staples space is roll-up act B&G Foods (NYSE: BGS). Shares have been beaten up a bit this year.

The stock currently trades at a 32% discount to its 52-week high. However, the company has grown earnings per share (EPS) at an average annual rate of 15% over the last five years. This looks like a classic case of the market throwing the baby out with the bath water.

B&G, best known for its Ortega and Cream of Wheat brands, has strategically grown its portfolio by acquiring old brands cheaply and breathing new life into them. They’ve also secured good shelf space in the dollar store segment. As chains such as Dollar General (NYSE: DG) expand their grocery businesses, B&G has partnered with them to provide chain-specific packaging and pricing.

The company has made some high-profile acquisitions lately, including Pirate Brands, maker of the popular Pirate’s Booty snack, iconic vegetable brand Green Giant, as well as healthy snack maker Back to Nature Foods. Full disclosure: B&G’s LeSeur brand canned peas are the only canned peas consumed in the Fischbaum household. Also, my teenagers are capable of eating their weight in Pirate’s Booty.

This smart acquisition strategy is flowing through to the numbers.

The company cracked the billion-dollar mark for annual revenue last year, scooping up $1.39 billion in sales. This helped solidify B&G’s five-year average annual revenue growth rate of 21%. Compare that to larger competitors like Conagra Brands (NYSE: CAG), which shows just 3.6% in revenue growth for the same period. 

At the end of the day, revenue growth is the main price driver in what many investors see as a low-growth business. But B&G has shown that they are, indeed, a growth business, rewarding shareholders with 5-year average annual dividend growth of 11%.

Risks To Consider: The company’s long-term debt to capitalization is a bit high, hovering at a little better than 50%. This is typical of a company growing through acquisition and it appears that management is making smart, strategic choices when they go shopping, as the recent Green Giant acquisition demonstrates.

Action To Take: Currently, B&G shares trade at around $36 with a forward P/E of 15.8 and an attractive 5.2% dividend yield. The combined EPS and revenue growth momentum should allow the forward P/E to expand to 19, which would result in a 12- to 18-month price target of $39. When combined with the dividend, the total return would clock in around 20%. While consumer staples are not nearly as sexy as some stocks, conservative investors should do well adding BGS to their portfolios.

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