Shares of Tyson Foods Inc (TSN - Analyst Report) reached a new 52-week high of $26.05 on Jul 1, 2013, after the corn prices touched a record low since Oct 2010.
Shares of this meat processor recorded a healthy return of 40.4% on a 1-year basis and 30.4% on a year-to-date basis. The company’s long-term estimated EPS growth rate is 8.50%. Average volume of shares traded over the last three months came in at approximately 4,064K.
The price of corn, which is the main feed for chicken, slid for an eighth session in a row following a record crop in the U.S. Moreover, favorable climate has reduced the risk of yield losses for the year. As per the U.S. Department of Agriculture (USDA), harvest was highest since 1936.
USDA estimates a record harvest of 14.005 billion bushels this year, up 30% from last year’s drought-damaged crop. This is expected to benefit Tyson as lower corn prices imply lower input cost for Tyson.
Tyson is also geared to enrich its portfolio and has acquired the California-based Circle Foods LLC last month. The acquisition helped it to improve its Mexican cuisine,which is becoming increasingly popular in the U.S. processed food industry.
At the investors’ meet in May this year, Tyson announced that the company will focus on innovation as an important part of their growth strategy. It also plans a product launch for fiscal 2013.
Tyson expects to achieve top-line sales growth of 3% to 4% every year. Value added sales are expected to grow within 6% to 8%, while international sales are expected to increase 12% to 16% during fiscal 2013. The company also aims to maintain a bottom-line growth of 10% every year.
Other Stocks to Consider
Currently, Tyson carries a Zacks Rank #3 (Hold). Other meat producers in the industry that are worth considering include Sanderson Farms, Inc. (SAFM - Snapshot Report) and Pilgrim’s Pride Corp. (PPC - Analyst Report) . Both the companies hold a Zacks Rank #1 (Strong Buy). Another company in the consumer staples sector that holds a Zacks Rank #1 (Strong Buy) is Flower Foods Inc. (FLO - Snapshot Report) .