3 meat stocks to watch as the industry outlook brightens

Zaks Foods – Meat products industry players are benefiting from rising consumer demand for protein due to heightened health awareness. Rising demand for plant-based meat is also prompting companies to expand in this sector. Companies are helping to achieve this goal by focusing on innovation and expanding production capacity.

Although there are concerns about increased manufacturing costs and supply chain disruptions, efforts to expand production capacity and efficient pricing will Hormel Foods Co., Ltd. HRL, Tyson Foods, Inc. TSN and Beyond Meat Co., Ltd. BYND is in a good position.

About the industry

Sachs Foods – The meat products industry consists of companies that manufacture, process, market, distribute and sell a wide range of meat products, including poultry, pork, beef, processed foods and plant-based meats. Some companies also offer poultry and turkey products alongside nutritional foods and supplements, dessert and drink mixes, and industrial gelatin products. Most of the companies serve retail and foodservice customers, but some companies are grocery retailers, grocery wholesalers, meat distributors, warehouse club stores, and industrial food processing companies. , chain restaurants, international export companies, delis and commercial operators such as school cafeterias. such as hospitals. Product offerings include frozen whole chickens, pork main cuts, salads, sandwiches and meatballs.

Key trends shaping the future of the meat industry

Growing demand for protein, plant-based meat: As consumers become more health conscious, the demand for protein-rich foods is increasing. Consumers, especially fitness enthusiasts, are adopting protein-rich ketogenic diets. The growing demand for protein has been a boon to meat product companies that have focused on strengthening their portfolios with constant innovation. Meat-free meat and plant-based meat products have become increasingly popular in recent years. Consumers’ growing tendency to experiment with new products and growing health consciousness are also increasing demand for alternatives to traditional meat products. Most plant-based alternatives are low in artificial ingredients and preservatives and advertised as being extremely healthy. These food options are also considered a useful protein source for those who follow a vegan diet. Industry experts believe plant-based protein could emerge as a major disruptor to the traditional meat market. The growing demand for plant-based foods, especially meat alternatives, has led many companies to invest heavily in this sector.

Expansion efforts are well underway: Companies in the industry seek to expand their portfolios and market presence through strategic partnerships, acquisitions, and expansion of production capacity. To this end, companies have sought opportunities to expand their manufacturing capabilities, including opening new manufacturing units, expanding existing plants, and partnering with co-manufacturers. Some companies are investing in automation technologies, such as accelerating digitization. Additionally, some companies, such as Beyond Meat and Hormel Foods, have focused on unlocking international potential, with good results.

Cost issues continue: Rising raw material costs remain a concern for many in the meat food industry. Businesses are witnessing soaring prices for raw materials, packaging, consumables, freight, logistics and labor. Rising costs for corn, soybean meal, feed ingredients and live animals are hurting margins. Some companies expect inflationary pressure to continue, which is likely to squeeze profit margins.

Sachs industry rankings show solid outlook

Zaks Foods – The meat products industry is part of the broader Zaks Consumer Staples division. The industry currently holds Zacks Industry Rank #123, placing it in the top 49% of over 250 Zacks industries.

The Group’s Zacks Industry Rank (the average of the Zacks Rank of all member stocks) indicates a strong near-term outlook. Our research shows that the top 50% of industries ranked by Sachs beat the bottom 50% by more than 2 to 1.

Given the positive outlook for the industry, here are a few stocks to consider in your portfolio. But before that, it’s worth taking a look at the industry’s performance and current valuation.

Industry and the broader market

The Zacks Food & Meat Industry has underperformed the broader Zacks Consumer Goods Sector and the S&P 500 over the past year.

The industry declined 31% over the period, compared to a 4.6% growth rate for the broader sector. Meanwhile, the S&P 500 index rose 7%.

1 year price performance

Industry Current Rating

Based on the 12-month price-to-earnings ratio (PER) commonly used to value consumer staples stocks, the industry is currently trading at 19.16x, compared to 18.77x for the S&P 500 and the sector. 18.32 times of

Over the last five years, the industry has traded multiples as high as 19.16x and as low as 11.41x, with a median of 15.45x as shown in the chart below.

Price earnings ratio (past 5 years)

3 meat food strains to watch

Hormel food: This Zachs Ranked No. 3 (Hold) company is benefiting from efforts to increase production capacity. Additionally, prudent acquisitions have worked well for the company. In addition, Hormel Foods’ One Supply Chain initiative has improved the company’s fuel efficiency by centralizing operational, logistics and procurement decisions. The modernization of its technology and e-commerce capabilities, the establishment of the Digital Experience Group and its commitment to transforming the Jenny O Turkey store bodes well. In its previous earnings call, HRL forecast net sales in the range of $12.6 billion to $12.9 billion for fiscal 2023, representing growth of 1% to 3% from fiscal 2022 levels. I’m here. you can see Here is the complete list of today’s Zacks #1 ranked (strong buy) stocks.

Hormel Foods’ sales for the current year, according to Zachs Consensus, suggest growth of about 1% from figures reported in the same period last year. The consensus mark for earnings has fallen by a penny over the past seven days. HRL shares have fallen 20.4% over the past six months.

Price and Consensus: HRL

Tyson Foods: The meat company has benefited from strategic growth efforts, including a focus on protein-rich brands and capacity expansion efforts. Tyson Foods operates in beef, pork, poultry and ready-to-eat segments and has explored alternative sources of meat and protein products. The Zachs consensus estimate for TSN’s revenue for the current fiscal year shows an increase of 1.2% from the previous year’s reported figures. The consensus mark for Tyson Foods earnings has fallen 19.3 percent over the past seven days. The company’s stock has fallen 25% over the past six months. The third-largest Zacks-ranked company is always looking for ways to improve its cost structure.

Price and Consensus: TSN

Beyond Meat: A strong base of retail and food service customers, along with the growing popularity of plant-based meats, has worked well for the #3 Zachs Ranked company. The company, which manufactures, markets and markets this plant-based meat product, benefits from its strong product portfolio as it focuses specifically on innovation. Apart from expanding its portfolio, Beyond Meat has also benefited from efforts to strengthen its distribution network and e-commerce capabilities.

A Zacks Consensus estimate for Beyond Meat’s bottom line profit for the current financial year suggests growth of 44.5% compared to figures reported in the same period last year. Over the last seven days, the consensus mark for bottom line earnings improved from a loss of $3.24 per share to a loss of $3.19 per share. BYND shares have fallen 14% over the past six months.

Price and Consensus: BYND

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