Tyson Foods, Inc. (TSN Quick QuoteTSN - Free Report) is gaining on rising demand in the retail channel. The company’s focus on protein-packed brands and capacity-expansion efforts are driving growth. Thanks to such upsides, the Zacks Rank #2 (Buy) company’s stock has rallied 17.7% in the past six months compared with the industry’s rise of 2.9%. The stock has comfortably outpaced the Zacks Consumer Staples sector’s decline of 4.5% during this time.

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Strong Performance

Tyson Foods has been benefiting from robust growth in the retail core business, while its foodservice business is seeing a rebound. During the first quarter of fiscal 2022, the company’s top and the bottom line increased year over year and surpassed the Zacks Consensus Estimate. Quarterly results gained from robust performance across the retail channel, which contributed nearly $350 million to the top line growth. The company’s retail core business lines, including brands like Tyson, Jimmy Dean, Hillshire Farm and Ball Park, sustained their volume share position. Higher sales from the foodservice channel drove sales by $1 billion. The company’s diverse protein portfolio, omnichannel capabilities, solid brands and value-added products contributed to the upside. Solid performance in the beef unit, earlier-than-anticipated recovery in prepared foods along with strong chicken and pork segments boosted profits.

Focus on Protein-Packed Brands

Tyson Foods is focused on higher protein production to cater to the rising demand for protein-packed food. For fiscal 2022, management anticipates sales in the upper end of the $49-$51 billion range. Volumes are expected to rise 2-3% year over year as the company is committed to optimizing its footprint and operating its plants at full capacity. For fiscal 2022, the United States Department of Agriculture (“USDA”) forecasts production in the Chicken segment to improve nearly 2%.

Tyson Foods boasts a rich portfolio of protein-packed brands that are growing rapidly across the globe. The company has undertaken the divesture of non-protein businesses (such as Sara Lee Frozen Bakery, Kettle and Van’s) to focus more on the growing protein-packed food arena. TSN has been steadily expanding fresh prepared foods offering, considering consumers’ inclination toward natural fresh meat offerings without any added hormones or antibiotics.  In June 2021, Tyson Foods announced that it is rolling out a range of plant-based products in chosen retail markets and digital platforms in the Asia Pacific under the First Pride brand. The introduction of plant-based alternatives in the region brings Tyson Foods closer to its objective of building an impressive portfolio of plant protein brands. In January 2021, the company launched new alternative protein offerings under the Jimmy Dean Label.

Measures to Boost Efficiency

Tyson Foods is undertaking several operational and supply chain efficiency programs to place itself better for the long run. In this regard, the company is investing in capacity expansion and automation technology investments. In its fiscal first-quarter earnings call, management highlighted that it is on track to open 12 new plants, which will enable it to tackle capacity constraints and growing demand for protein globally. The additional capacities include nine chicken plants, two case-ready beef and pork facilities as well as one bacon unit. Management expects to anticipate capital expenditures of nearly $2 billion during fiscal 2022 to support global protein demand growth.

Starting from fiscal 2022, management launched a new productivity program to make the organization better, faster and more agile. The program is focused on three critical areas — operational and functional excellence, digital solutions along with automation. The company expects to achieve $1 billion in productivity savings by the end of fiscal 2024 and $300-$400 million in fiscal 2022, relative to a fiscal 2021 cost baseline.

All said, we believe that focusing on such growth endeavors is likely to help Tyson Foods keep its growth story going.

Looking for Solid Food Stocks? Check These

Some other better-ranked stocks are Sanderson Farms, Inc. , Pilgrim’s Pride (PPC Quick QuotePPC - Free Report) and Flowers Foods (FLO Quick QuoteFLO - Free Report) .

Sanderson Farms, the producer of fresh, frozen and minimally prepared chicken, currently sports a Zacks Rank #1 (Strong Buy). Shares of SAFM have dipped 3.4% in the past six months.You can see the complete list of today’s Zacks #1 Rank stocks here.

The Zacks Consensus Estimate for Sanderson Farms’ current financial-year sales and earnings per share (EPS) suggests growth of 18% and 56.1%, respectively, from the year-ago reported number.

Pilgrim’s Pride, which produces, processes, markets and distributes fresh, frozen, and value-added chicken and pork products, carries a Zacks Rank #2. Shares of Pilgrim’s Pride have moved down 18.1% in the past six months.

The Zacks Consensus Estimate for Pilgrim’s Pride’s current financial-year EPS suggests growth of 19.7% from the year-ago reported number. PPC has a trailing four-quarter earnings surprise of 24.9%, on average.

Flowers Foods, the producer and marketer of packaged bakery products, currently carries a Zacks Rank #2. Shares of Flowers Foods have jumped 6.1% in the past six months.

The Zacks Consensus Estimate for Flowers Foods’ current financial-year sales and EPS suggests growth of 7.2% and 4%, respectively, from the year-ago reported figure. FLO has a trailing four-quarter earnings surprise of 9%, on average.