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The most recent quarter seemed to be a good one for Sara Lee Corp. (SLE), with profits up quite a bit.

The company is in the middle of a substantial restructuring effort, which has involved selling off its less profitable divisions like Branded Apparel, and SLE is now focusing more on its food divisions -- which is of course what everyone thinks of when they hear the name Sara Lee. Beyond the well known bakery goods, SLE also owns Hillshire Farm and Jimmy Dean, and a number of other everyday brands. By focusing on these divisions, the company expects profits to grow in coming years.

It's good to see these efforts starting to pay off, but as a BMO Capital Markets report noted, however, volume was actually down in the most recent quarter, and SLE exceeded expectations primarily because of a lower tax rate than was expected. Operating margins were up, but only to 5.7%, which is quite a long way from the double-digit margins SLE hopes to attain. It's possible the company will get to that level of profitability over time, but it's probably going to take a while. Meanwhile, it's not clear that there's a great deal of room for SLE's brands to deliver substantial growth given the stiff competition in its industry. The company also experienced its own recall scare back in July, although this apparently didn't have much of a negative impact on the stock.

I'd keep an eye on this one, and watch to see where the restructuring takes the company over the next year. I'd hold off buying for now.

Type of Stock: A large and well-known food manufacturer in the process of remaking itself.

Price Target: SLE's stock has been in the teens for almost two years, and it's hard to see it gaining much ground in the near future. But it's one to watch; a few more good quarters and we could see some growth over the next two years or so.

SLE 1-yr chart:

SLE

Source: Sara Lee: One To Watch