It’s challenging trying to time the market. Even so, we can prioritize which securities to buy. Prices come down temporarily and opportunities present themselves. For example, I looked at JNJ’s recent post earnings price decline as a sign to act. Days later analysts upgraded expectations and the stock rose. I’ve been watching a dozen other stocks. We discussed Apple and Amazon recently. Others include UNP (rail), XOM (oil), SON (packaging), AXP (finance), NEE (utility), and much more. However, one stock outshined all others.
I was actually looking into General Mills when I discovered Hormel Foods. Motley Fool recently wrote an article comparing the two packaged foods giants. It was a great article but I figured, why not own both? Both securities are near recession proof and offer some fantastic brands. Hormel’s well-known offerings include SPAM, Dinty Moore, Jenny-O, Skippy, Applegate Organic Meats, and Hormel itself. In fact, I had some organic Applegate hot dogs for dinner. If you buy a stock you should love its products!
Hormel shares have cratered from all-time high; down ten points. This is largely due to pricing pressures facing the company’s Jenny-O brand. With turkey prices at 7-year lows Jenny-O faced an operating profit decline of 25%. Fortunately much of this decline was offset by strong performances in refrigerated and specialty foods. Because the company is diversified analysts expect the company to grow earnings regardless of turkey prices. Value Line is predicting an EPS of $1.70/share, up from $1.64 in 2016.
HRL appears to be recession proof. Earnings increased handily in 2009. Sales remained relatively steady. The company recently increased its dividend by 17% and still has a low payout ratio. In 2016 dividends represented only 33% of net profit! With solid growth potential and a low payout HRL is poised for additional double digit dividend increases. Furthermore, Value Line rates HRL with a “1” for safety, “A” for financial strength, “90” for price stability, and “100” for price growth persistence. Having a near-recession proof stock with high growth potential is certainly a welcomed addition to my portfolio!
DISCLAIMER: I am not a licensed investment advisor or tax professional. I am not liable for any losses incurred by any parties. This blog should be viewed for entertainment and/or educational purposes only. Any transactions published are not recommendations to buy or sell any securities. Please consult with an investment professional before making investment decisions.