Smucker's

Important disclosures appear on the last page of this report.

Krause Fund Research

Spring 2006

Food and Non-Alcoholic Beverage

Recommendation: BUY

Analysts

Joseph Kern

joseph-kern@uiowa.edu

William Seitz

william-seitz@uiowa.edu

James Terrell

james-terrell@uiowa.edu

Company Overview

J.M. Smucker Co. was founded in 1987. They primarily

operate in North America. They are a leading producer in

fruit spreads, peanut butter, oils and shortenings, natural and

health foods, ice cream toppings, and condiments. SJM

classifies operations into their U.S. market segment and

their special market segment. The U.S. market segment

consists of consumer foods and oils businesses. The special

market segment consists of foodservice, industrial,

international, and beverage businesses. In 2005 SJM

acquired International Multifoods, which added flour and

baking products to their product mix. Some of SJM's most

recognizable brands are: Smucker's, Jif, Crisco, Pilsbury,

and Hungry Jack.

Stock Performance Highlights

52 week High $51.04

52 week Low $37.15

Beta Value 0.62

Average Daily Volume 359,800

Share Highlights

Market Capitalization $2.28 b

Shares Outstanding 58.21 m

Book Value per share 29.93

EPS (ttm) $2.22

P/E Ratio 17.90

Price/Sales 1.70

Dividend Yield 2.70%

Dividend Rate 1.08

Company Performance Highlights

ROA 6.00%

ROE 7.86%

Sales $2.14 b

Financial Ratios

Quick Ratio 0.40

Current Ratio 2.26

Debt to Equity 0.25

J.M. Smucker Co. (NYSE: SJM)

April 17, 2006

Current Price $39.54

Target Price Range $50-$53

Rising Input Costs and Slow Economic

Outlook Wont Hurt Growth

* Rising interest rates will result in an economic downturn.

Non-cyclical companies like SJM will provide a safe haven for

investors in a bearish economy.

* SJM relies heavily on commodities for their production of

goods. They will need to cut costs in other areas through

restructuring and improved synergy with International

Multifoods to offset the rising prices of commodities.

* Private label goods continue to threaten the market share of

SJM and other companies that sell branded products. An

economic downturn will mean that SJM and their competitors

will have to compete on market share and cost savings.

* SJM will have improved growth opportunities and favorable

exchange rates in their Canadian business market with the

addition of top Canadian brands Bick and Robin Hood from the

acquisition of International Multifoods.

* SJM has led the industry in sales growth since 2003. SJM

also improved their gross margin more than any other company

in the industry for the same period. They will look to continue

improving gross margin in a high-cost environment and maintain

sales growth in a very competitive industry.

One Year Stock Performance

Important disclosures appear on the last page of this report.

Executive Summary

As the economy continues into an economic

downturn, investors will look to invest in noncyclical

industries like the food and non-alcoholic

beverage industry. SJM will need to improve

efficiency and cut costs through restructuring and

improved synergy with International Multifoods in

order to offset rising commodity prices. They will

continue to have market share threatened by

competitors' branded label products as well as the

growth of private label goods. SJM will maintain

a North American focus with the best growth

opportunities in the Canadian market. Their

ability to adapt to consumer's changing needs will

be crucial in the company's future success.

We recommend a buy for SJM with a target price

range of $50.00-$53.00, which