Opinions
John Petrides
Tyson Foods Inc.
TSN-N
DON'T BUY
Feb 09, 2017
Stock price when the opinion was issued
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Premium contentPremium content(A Top Pick Jan 14/21, Up 15.6%)Stockchase Research Editor: Michael O'Reilly Our PAST TOP PICK with TSM has triggered its stop at $75. We recommend covering any holdings at this time. Combined with our previous recommendation to cover 50% of the position, this results in a total investment return of 19%.
TSN pays a good yield of 4%, and management has grown its dividends nicely over the past 10 years. Sales growth is expected to be modest in the next few years (low single digits), and it generates a good level of operating cash flows. Its margins have contracted over the past 12 months, and it has missed on its five past earnings results. Its balance sheet is strong, with a good cash balance of $706M and an equity position of $18.9B. It has its strengths and operates in a defensive sector. We would be comfortable with this name for income, but we do not expect much in the way of growth in the near to intermediate term.
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Has been a yoyo over the last year. They had headline risk that they manipulated chicken prices. They are the largest chicken producer. He refers SAFM-Q because their valuation is cheaper and they are smaller.