For immediate release
Chicago, IL – January 21, 2022 – Today, Zacks Investment Ideas presents: The Consumer Staples Select Sector SPDR ETF XLP, Sanderson Farms, Inc. SAFM, Tyson Foods, Inc. TSN, and Hormel Foods Corp. HRL.
Pound the Meat: 3 Meat Stocks Outperforming the Market
The market continued its recent selloff yesterday as the Nasdaq dipped below its 200-day moving average like a hot knife in butter, dropping -1.15% to end at its lowest level since October last year. . The selling intensified in the closing bell, sending the Nasdaq into correction territory. The other indices followed suit with the S&P 500 losing -0.97% and the Dow Jones falling -0.96%. The three indices are down over the year.
The VIX index jumped 4.65% to close at its highest level in more than a month. Over the past year, low spikes in volatility have presented good buying opportunities, with the “buy down” strategy performing well. But with just eight trading days left in January, it remains to be seen whether the bulls will take hold or if this is just the start of a bigger market decline.
Major averages attempt to draw a line in the sand today as the Nasdaq seeks to recover its 200-day moving average. We’ll see how it all plays out until the end.
Either way, it is extremely likely that 2022 will not see the 20-30% annual gains that markets have enjoyed in recent years. Volatility is here to stay after being virtually non-existent last year, so it’s a matter of targeting the right sectors and industry groups when choosing the optimal investments for your portfolio.
Two defensive sectors that tend to outperform during market downturns are Consumer Staples and Utilities, and we see this playing out right now, with Staples appearing to be the stronger of the two. Commodities as a group hit a new high earlier this month and are holding up well, within 2% of that record price. the Consumer Staples Select Sector SPDR ETF is a great way to gain exposure to many companies that are weathering recent volatility well.
Consumer Staples Select Sector ETF SPDR outperforms the market to kick off the new year. Last year, XLP repeatedly found support at its 200-day moving average, a good sign for bulls. XLP continues to hit a series of higher highs and should hold up well against any market downturn this year.
Below, we’ll analyze three consumer staples companies, two of which are included in XLP’s holdings. All three companies are part of the Zacks Food – Meat Products industry, which ranks in the top 18% of 254 Zacks-ranked industries. Investing in the best performing industry groups provides a constant tailwind to your investment success.
Sanderson Farms, Inc.
Sanderson Farms is an integrated poultry processing company engaged in the production, marketing and distribution of fresh, frozen and minimally prepared chicken. The company’s prepared chicken product line includes institutional and consumer packaged chicken products for food service establishments and distributors. Founded in 1947 and based in Laurel, MS, SAFM operates 11 hatcheries, 9 feed plants, 12 processing plants and 1 prepared chicken plant.
Zacks #1 ranked stock (Strong Buy), SAFM easily beat earnings expectations in the latest quarterly announcement, posting EPS of $8.24 versus Zacks’ consensus estimate of 4, $42 – an 86.43% surprise. The company benefited from strong fourth-quarter execution in production, sales and live processing, as revenue and net income increased year-over-year. Higher demand and higher prices for food products sold to retail grocery customers boosted quarterly results.
SAFM has exceeded earnings estimates in each of the past six quarters. The company is relatively undervalued (7.76 forward P/E) and has delivered an average positive surprise of 99.15% over the past four quarters. The stock followed suit, rising more than 42% in the past year.
Looking to this year, analysts covering SAFM have revised up their full-year EPS estimates by 12.11% over the past 30 days. The Zacks consensus estimate for 2022 EPS now stands at $24.26, representing growth of 19.8% from 2021.
Tyson Foods, Inc.
Tyson Foods is the world’s largest processor and marketer of chicken, pork and beef and is the second largest Fortune 500 food company. A member of the S&P 500, TSN manufactures and markets its products under recognized brands such as Jimmy Dean , Hillshire Farm and Ball Park. The company sells its products in more than 80 countries through its sales force to food retailers and wholesalers, meat distributors, restaurant chains, convenience stores and hospitals. TSN was founded in 1935 and is based in Springdale, AR.
Trading at an attractive P/E of 12.89, Tyson Foods gained on strategic growth efforts, including a focus on protein-rich brands and capacity expansion efforts. For fiscal 2022, TSN expects to increase total volumes by 2-3%, outpacing overall growth in protein consumption. A significant percentage of this growth will likely come from the company’s chicken segment which raises and processes live chickens into fresh, frozen and value-added chicken products.
TSN has beaten earnings for the past six consecutive quarters, posting an average trailing four-quarter earnings surprise of 25.15%. The company recently reported quarterly EPS of $2.3 in November, a surprise of 4.55% from consensus. TSN stock has outperformed the market over the past year with a return of over 42%.
Zacks’ consensus estimate for 2022 revenue is $50.57 billion, a 7.47% increase over last year. TSN is due to release its next quarterly earnings report on February 7and.
Hormel Foods Corp.
Hormel Foods is a global branded food company that develops, processes and distributes a variety of meat, nut and food products to retailers, foodservice, delicatessen and commercial customers. The company sells its products under more than 30 well-known brands such as SKIPPY, SPAM, Hormel and Applegate. A member of the S&P 500, Hormel Foods was founded in 1981 and is based in Austin, MN.
HRL has beaten earnings in each of the last four quarters, with an average surprise of 1.78%. The company posted quarterly EPS of $0.51 in December, a 2% surprise on consensus estimates. The stock has been showing relative strength lately, up more than 20% in the past four months and is currently trading near a 52-week high.
What Zacks’ model reveals
The Zacks Earnings ESP (Expected Surprise Prediction) identifies companies that have recently experienced positive earnings estimate revision activity. The idea is that this newer information can serve as a better predictor of the future, giving investors a head start during earnings season. Combining a Zacks No. 3 or higher ranking with a positive earnings ESP, stocks produced a positive surprise 70% of the time according to our 10-year backtest.
With +1.5% Earnings ESP and Zacks Rank #3 (Hold), another earnings beat may be in the cards for HRL investors.
The Zacks consensus estimate for 2022 EPS stands at $1.97, which translates to 13.87% growth over last year. HRL is due to publish its results on February 17and.
Zacks names ‘only one best choice for doubling up’
From thousands of stocks, 5 Zacks experts have each picked their favorite to skyrocket by +100% or more in the coming months. Of these 5, Research Director Sheraz Mian selects one to have the most explosive advantage of all.
As one investor put it, “curing and preventing hundreds of diseases…what should this market be worth?” This company could rival or surpass other recent Zacks stocks that are expected to double, such as Boston Beer Company which jumped +143.0% in just over 9 months and NVIDIA which jumped +175.9% in a year.
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Past performance is not indicative of future results. The potential for loss is inherent in any investment. This document is provided for informational purposes only and nothing herein constitutes investment, legal, accounting or tax advice, or a recommendation to buy, sell or hold any security. No recommendation or advice is given as to whether any investment is suitable for any particular investor. It should not be assumed that investments in the securities, companies, sectors or markets identified and described have been or will be profitable. All information is current as of the date hereof and is subject to change without notice. The views or opinions expressed may not reflect those of the company as a whole. Zacks Investment Research does not engage in investment banking, market making or asset management of securities. These returns come from hypothetical portfolios composed of stocks with Zacks Rank = 1 that have been rebalanced monthly without transaction fees. These are not the returns of actual stock portfolios. The S&P 500 is an unmanaged index. Visit https://www.zacks.com/performance for more information on the performance figures displayed in this press release.
5 shares ready to double
Each was handpicked by a Zacks expert as the #1 preferred stock to earn +100% or more in 2021. Previous recommendations have skyrocketed +143.0%, +175.9%, + 498.3% and +673.0%.
Most of the stocks in this report fly under the radar on Wall Street, which provides a great opportunity to get in on the ground floor.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.