Whenever there is high volatility and extreme uncertainty in the markets, investors tend to find refuge in defensive sectors like consumer staples, utilities, and healthcare. The consumer staples sector includes the food and food processing industries. The demand for core food products tends to sustain even when there is high economic hardship or war. After all, people need to eat to survive. The big food companies tend to outperform the broader markets during market crashes since their demand holds up when the economy is falling apart. In times outside of crises, food stocks have slow and stable growth rates and pay a decent dividend. So, investors interested in food company stocks to buy now may want to look at companies like Hormel Foods.
Hormel Foods Reports Record Revenues In Q1 2021
Hormel Foods reported its first-quarter 2021 earnings results on 18th February 2021. Revenues rose about 3% year on year to a shade under $2.5 billion, a record for the company. However, diluted earnings per share were down 9% year-on-year to $0.41. According to company management, Hormel’s brands Skippy, SPAM, Hormel, Applegate, Jennie-O, and Columbus all delivered impressive growth. The international and grocery products segments also did quite well during the quarter. The headwinds for Hormel Foods came from the supply chain costs and declines in the foodservice segment due to the pandemic. However, the management was optimistic about the future. It expected a positive impact from the acquisition of the Planters snack buts business. Hormel Foods is perceived as the best food company stock by some investors.
Tyson Foods and Hormel Foods Corporation are the two largest meat processing companies in the US. Hormel Foods’ stock has gained 50% since 2018, while Tyson Foods is flat for the last three years. Tyson Foods’ chart indicated prices following a cyclical pattern, while Hormel Foods appears to be a steady compounder when looking at a 3-year timeframe.