Hormel Foods is
an international manufacturer and marketer of consumer branded meat and food
products which are sold fresh, frozen, cured, smoked, cooked and canned
(Hormel, Always Tender, Cure 81, SPAM, Dinty Moore, Jennie-O, Mary Kitchen,
Little Sizzlers, Chi-Chi’s and Kid’s Kitchen).
HRL has grown profits and dividends
at a 9-10% annual rate for the past 10 years earning a 15% return on
equity. Despite rising feed costs, the company should continue to grow as
a result of:
(1) improving
pork processing margins,
(2) aggressive
new advertising campaign,
(3)
acquisitions, especially in the high margin ethnic food category,
(4)
aggressive cost reductions.
Negatives:
(1) highly
competitive industry,
(2) its cost of
goods sold are largely commodities; therefore, volatile prices can impact
margins,
(3) its
international exposure subjects it to currency fluctuations and foreign
regulations.
Hormel is rated
A by Value Line, has an 8% debt to equity ratio and its stock yields
approximately 2.1%.
Statistical Summary
Stock Dividend Payout # Increases
Yield Growth Rate Ratio
Since 2002
Debt/ EPS Down Net Value Line
Equity ROE Since 2002 Margin Rating
Chart
Note:
HRL stock made great progress off its
December 2008 low, quickly surpassing the downtrend off its April 2008 high
(straight red line) and the November 2008 trading high (green line). Long term, HRL
is in an uptrend (blue lines).
Intermediate term, it is in a trading range (purple lines). The wiggly red line is the 50 day moving
average. The Dividend Growth Portfolio
owns a 50% position in HRL , having Sold Half
in mid 2011 when stock traded into that range.
The upper boundary of its Buy Value
Range Sell Half
Range
11/12
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