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Lorne Steinberg Hormel Foods Corp HRL-N DON'T BUY May 07, 2019

It's suffering like Kraft with almost no revenue or earnings growth with a PE of 20. Their brands are not the best.

Lorne Steinberg

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$38.800

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food services

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DON'T BUY

It is a good and well managed company. It is a protein company and there are problems with protein pricing due to epidemics in livestock recently. He thinks it is 'too-hard-to-do'. It is too risky.

BUY

He ate Spam as a kid, a cheap meat. HRL has transformed from producing Spam to delivering packaged goods, so that has added value. Millennials are cooking less, so there's growing demand for ready-made meals. This means that HRL should do well.

COMMENT

It's always been a good company due to their ability to allocate capital appropriately. They were struggling before due to pork prices for SPAM. They're also in the spreads business like Skippy's. 5 year dividend growth is 16%. If they continue to keep margins up, it is a good company.

BUY

It reports next week. He expects sales to rise as they did in the spring lockdown because restaurants were closed.

BUY

They report Thursday. He hopes they buck the trend of food stocks facing tough comparisons vs. a year ago. They recently bought Planter's Nuts, an under-managed food brand. He suspects this deal to have paid off already for them.

BUY

It reports Thursday. It's down big from its highs, even after managers have made terrific moves in its portfolio. Its Spam will always sell and always has.

COMMENT

Hormel reports Wednesday. They sell much more than spam, though Spam sells well in a recession. General Mills and Pepsi have shown strength, and maybe HRL will too.

DON'T BUY

Is up 13% for the past year. They make Spam, Planter's Peanuts and other packaged food, an industry that has held up better than the market. Hormel just released its quarter and it was mixed: 51 cents EPS vs. expected 50 cents, lower than expected sales which worries him, a weak 2023 forecast because of a volatile, high-cost environment.

DON'T BUY

Is an analysts meeting on Thursday. All food stocks are getting killed these days.

PARTIAL BUY

Had a recent weak quarter, but could benefit from the weight-loss drugs need users to consume more protein

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Lorne Steinberg Hormel Foods Corp HRL-N DON'T BUY May 07, 2019

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