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 10-11% 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 1.8%.
Statistical Summary
Stock Dividend Payout # Increases
Yield Growth Rate Ratio
Since 2003
Debt/ EPS Down Net Value Line
Equity ROE Since 2003 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 trading high
(green line). Long term, it is in an
uptrend (blue lines). Intermediate term,
it is in an uptrend (purple lines). The
wiggly red line is the 50 day moving average.
The Dividend Growth Portfolio owns a 75% position in HRL ---a
result of having Sold Half in mid 2011 and the stock having advanced since
then. The upper boundary of its Buy
Value Range Sell
Half Range
12/13
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