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Opinions Mike S. Newton, CIM FCSI
Hormel Foods CorpHRLTOP PICKJun 08, 2016
Stock price when the opinion was issued
As of Jun 18, 2026. Market Open.
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At lot of names in the food space ramped up over the past decade, and have now come back to earth in the last 2-3 years. As a value investor, he loves the sector. We all need to eat, and eventually things will turn around.
Input costs are a consideration for the next year for sure. Higher oil and supply disruptions in the Middle East are the cause. Those are short-term factors, but a lot of that is already discounted in current stock prices.
He's overweight a bunch of the food names.
John Kim
It's suffering like Kraft with almost no revenue or earnings growth with a PE of 20. Their brands are not the best.
This is like so many other companies these days. It is a zero-growth business with minimal earnings growth that is squeezing out a few dollars here and there to increase its dividend every year. He doesn’t like the business model, because if you are not reinvesting in your business over time, it is pretty tough to find growth. Trading at over 20X earnings.
OK at these levels, but he would just do a half position now if he were getting into it. Growth is starting to slow a little on the top side, and they are struggling a little with some of their pork products because of rising prices. He would only do a half position and see what happens with that.
This owns about 30 brands including Skippy peanut butter. They are getting into the healthier food. It came on his radar screen because of its really long ascent, a very low volatile name. It was up about 500% for about 10 years and the dividend rose 300%. Then it had a big pull back of about 25%. They reported and actually beat earnings 2 weeks ago. The street turned on them. Dividend yield of 1.68%.